An SMSF gives you direct control over your super – you choose every investment, including direct property and individual shares – but you take on trustee responsibilities, largely fixed running costs (median around $4,400 a year per ATO statistics) and 100+ hours a year of involvement. An industry fund does everything for you for a percentage-based fee, typically under 1% of your balance. There is no legal minimum balance for an SMSF, and ASIC removed its old $500,000 guidance in 2022, but independent research puts the point where SMSF returns become competitive at around $200,000 – and the decision should never rest on balance alone. Here is how the two actually compare.
Last reviewed June 2026.
SMSF vs Industry Fund at a Glance
| Factor | SMSF | Industry fund |
|---|---|---|
| Who is responsible | You, as trustee – legally responsible for every decision, even when advisers are involved | Professional trustee regulated by APRA |
| Investment choice | Direct shares, direct property (including business premises), term deposits, unlisted assets, collectables within strict rules | Pre-built and member-choice options; no direct property, limited direct shares on some platforms |
| Cost structure | Largely fixed: admin, audit (median $550), $259 ATO levy, $67 ASIC fee – median total around $4,400 a year | Percentage of balance – APRA’s MySuper data shows total fees and costs of around 0.8% for a representative $50,000 account, with over 90% of MySuper products under 1% |
| Time required | Moneysmart: trustees average more than 8 hours a month (100+ hours a year) | Effectively none |
| Compliance obligations | Annual independent audit, annual return, investment strategy, record keeping – penalties for breaches | Handled by the fund |
| Protection if things go wrong | No government compensation for theft or fraud, no AFCA complaints against your own fund | Compensation scheme access and AFCA recourse |
| Insurance | Must be arranged individually – often dearer, and rolling out of an APRA fund can cancel existing cover | Default group cover, usually cheap and automatic |
What Balance Do You Actually Need?
This is the most argued-about number in superannuation, so it is worth citing the actual research rather than folklore.
- The Productivity Commission’s 2018 report into superannuation found that SMSFs with balances below $500,000 produced lower average net returns than APRA-regulated funds, which hardened into a widely quoted rule of thumb.
- In December 2022, ASIC removed the $500,000 threshold from its guidance (Information Sheet 274). ASIC’s position: “Superannuation balance, whether high or low, while important, is only one factor when considering whether an SMSF is suitable for a client” – alongside risks, costs, investment strategy, diversification, liquidity, trustee capability and time. The media release is 22-345MR.
- University of Adelaide research commissioned by the SMSF Association, using data from more than 318,000 SMSFs, found that funds with $200,000 or more achieved investment returns competitive with APRA funds – neither consistently outperformed the other above that level. Below $200,000, the fixed costs genuinely drag on returns.
The arithmetic behind that $200,000 figure is simple. SMSF costs are mostly fixed, so $3,000-4,000 of annual running costs is 2% of a $150,000 balance but only 0.4% of a $1 million balance. An industry fund charging roughly 0.8% of balance beats the SMSF on cost at small balances and loses to it at large ones. We break down every cost line in our guide to SMSF setup and running costs.
The Case for an SMSF: Control and Flexibility
People do not run SMSFs to save fees – they run them for what the structure can do that an industry fund cannot:
- Direct property. An SMSF can hold residential or commercial property directly, including – subject to strict rules – your own business premises leased back to your business at market rent. This is the single most common reason business owners establish one.
- Direct shares and concentrated positions. You hold the actual shares, control the timing of disposals, and manage capital gains around members’ circumstances – particularly valuable in pension phase.
- Tax management. Asset segregation choices, contribution timing, pension commencement timing and franking credit management are all in the trustee’s hands.
- Estate planning. Binding nominations, reversionary pensions and trustee control can be tailored in ways large funds do not offer.
One more consideration for larger balances: from 1 July 2026 the new Division 296 tax adds an extra 15% on the share of realised earnings attributable to total super balances above $3 million (25% in total above $10 million). It applies across all funds – SMSF and industry alike – but for affected members it changes the planning conversation around contributions, asset location and disposal timing, and SMSF trustees have more levers to manage it.
The Case Against: Responsibility, Time and Lost Protections
Every dollar of control comes with obligation. As trustee you are legally responsible for the fund’s decisions even if you rely on advisers. The fund must have a documented investment strategy, keep proper records, value assets at market each year, lodge an annual return and pass an independent audit every single year. Breaches attract administrative penalties that you pay personally – they cannot be paid from fund money.
Moneysmart is blunt about the downsides: trustees spend on average more than 8 hours a month managing their fund, SMSFs can cost more than retail and industry funds, and if your SMSF loses money to theft or fraud there is no access to the government compensation arrangements that protect APRA fund members. You also cannot complain to AFCA about your own fund’s decisions – you made them.
Who Should NOT Have an SMSF
- Balances well under $200,000 with no near-term plan (such as imminent large contributions or a business premises purchase) to grow past it – the fixed costs eat the return.
- People who will not put the hours in. If you will not read statements, sign minutes, review the investment strategy and respond to your accountant and auditor, the structure will fail you.
- Anyone planning an extended move overseas. Residency rules can make the fund non-complying, with severe tax consequences.
- People who want set-and-forget diversification. An industry fund MySuper option already does that, cheaply.
- Anyone relying on default insurance. Cover inside the new SMSF must be arranged from scratch, and closing your APRA fund account can cancel cover you may not get back on the same terms.
- Couples or families where one member does everything. All trustees are equally liable – “my spouse handled it” is not a defence the ATO accepts.
Making the Call
The honest answer for most people with modest balances and no special investment plans is an industry fund. The honest answer for business owners who want their premises in super, investors with $400,000+ who want direct control, and families doing serious retirement and estate planning is often an SMSF – provided the administration is done properly.
Prime Partners provides fixed-fee SMSF administration and tax services – establishment advice, annual accounts and returns, audit coordination and trustee support – from our North Sydney and Orange offices. If you are weighing up the switch in either direction, talk to us first: the decision is much easier to get right before the rollover than after it.