Choosing a Fund: Industry, Retail or SMSF?

Quick Look

Focus: How to compare super fund types and choose the right one for your needs

Key Takeaways :

Industry and retail funds suit most Australians with built-in diversification and scaled growth and volatility default choices, but fees can be a bit high.
SMSFs offer personal control but come with complexity, costs, and legal responsibilities.
Your super balance, time, and confidence all affect which fund type fits best.
Reading Time: ≈7minutes

Introduction

Superannuation is one of the most important financial assets most Australians will ever have. But with more than $3.7 trillion in the system (APRA, 2024), deciding how to manage your super can feel overwhelming.

Whether you’re curious about more control, looking for lower fees, or just trying to avoid a poor choice, the right fund type depends on you—not the ads.

Let’s break down the differences between industry funds, retail funds, and self-managed superfunds (SMSFs) so you can make a smart, confident decision.

Context & Problem

The biggest myth in super? That there’s a“ best” fund type for everyone.

In reality, what suits one person may be totally wrong for another. The wrong choice could mean higher fees, poor returns, or unnecessary stress. For example:

Choose an SMSF too early, and you could pay thousands in admin and accounting fees for little gain
Stick with a basic default fund too long, and you might miss out on investment options better suited to your goals

Fund types differ in four main areas:

Fees and costs
Investment choice
Insurance options
Level of control and responsibility

Understanding these differences is the key to avoiding costly mistakes.

Strategy & How To

Industry Funds

Best for: Everyday people wanting hassle free, low-cost, reliable super management

Ownership: Run to benefit members (not shareholders)
Fees: Among the lowest—often 0.75%to1% annually
Investments: Solid default options, plus pre-set scaled choices like “High Growth ”or“ Balanced”
Insurance: Automatically included (life, TPD, income protection)
Extras: Limited customisation; no direct share or property investing

Example : A 35-year- old with $80,000 in super might pay ~$600 per year in admin and investment fees

Retail Funds

Best for: Those wanting more choice, but not full SMSF control

Ownership: Run by financial institutions, aiming to make a profit
Fees: Range from very low to quite high depending on your choice—0.3%to 1.5% annually
Investments: Broader menu than industry funds, including some managed funds and direct shares
Insurance: Available, but sometimes less generous or costlier
Extras: Access to advisers which is an additional cost

Tip: Check for platform or adviser fees

SMSFs

Best for: Investors with experience, time, and balances over $250,000

Ownership: You control everything—investments, records, compliance
Fees: Fixed costs for admin, audit, tax (often$2,000–$5,000/year)
Investments: Nearly unlimited—shares, ETFs, direct property, even crypto (within rules)
Insurance: Must be arranged separately
Direct Property Investment: Ability to invest in real estate with borrowings typically up 70% of property value
Legal Duties: Trustees must follow strict ATO rules or face penalties

Warning: SMSFs are not set-and-forget. You’re legally responsible for keeping everything compliant under complex legislation and all but the very experienced will need professional advice annually.

Decision Flowchart–Which Fund Type Might Suit You?

Decision Flowchart–Which Fund Type Might Suit You?

Do you have over $250,000 in super?

No → Industry or retail fund likely best for now
Yes → Keep going

Do you want to pick your own investments (e.g. direct shares, property)?

No → Industry or retail fund can meet your needs
Yes → Keep going

Do you have the time, skills and interest to manage a fund?

No → Stick to retail/industry with more investment choice
Yes → An SMSF could be appropriate—get professional advice first

Case Study

Case: Leah (Age 47, Balance $300,000) Leah is a business owner who wants to invest part of her super into a commercial property. In her current retail fund, she can’t access direct property After advice, she sets up an SMSF for$3,000with$3,000for admin annually She uses $200,000 of her balance (plus borrowings) to purchase a small office for her business Her SMSF now earns rent, which is deductible to her business and super income that’s additional to her annual contributions Outcome: For Leah, control and strategy outweighed the admin burden. But it wouldn’t suit someone with a lower balance or less experience.

Common Questions & Misconceptions

Isn ’t SMSF always cheaper than retail funds?

Not necessarily. Unless your balance is over$250,000–$300,000,SMSFs are usually more expensive to run because the admin is a fixed basic cost which is additional to the investment fees.

Can I switch between fund types later?

Yes—but watch for exit fees, tax on selling assets, and timing of insurance cover.

Are industry funds really “ better ”?

They’re often cheaper and simpler. But “better” depends on your goals. If you know what you’re doing and have a professional adviser to point you in the right direction, retail funds are much more viable and can be cheaper depending on your objectives and stage of life.

Can I hold property in any super fund?

Only SMSFs can directly buy and hold real property and borrow. Industry and retail funds may offer property trusts, but these aren’t really property because they trade on the stock exchange like shares, and you can’t choose or control the property holdings.

Will I lose insurance if I leave my fund?

Usually you will but always check what cover you have—and whether a new fund can match or continue it—before switching.

Conclusion

Conclusion

Choosing the right fund type isn’t about picking the “best” one—it’s about picking what suits you right now.

Industry and retail funds work well for most people. SMSFs can offer flexibility but come with serious responsibility. The good news? You can reassess over time.

Learning how these fund types differ puts you in the driver’s seat. And when you’re ready to make a move, professional help can make the next step smoother and safer.

Is your super invested in the right option?

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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.

How We Keep It Trustworthy

Every article includes a Review & Fact Check section below—so you know exactly where our facts come from, what’s uncertain, and whether there’s any bias.

Review & Fact Check

1. Fact References

Fact References
- Industry, retail and SMSF structure: Australian Taxation Office (ato.gov.au)
- Typical fees and investment menus: Money Smart “Compare super funds”(moneysmart.gov.au)
- SMSF minimum cost thresholds: ASIC “Running an SMSF”(asic.gov.au)
- Super system size: APRA Quarterly Superannuation Statistics (March 2024)

2. Unverified or Inconclusive Items

Case study (Leah) is illustrative only—not based on an individual or verifiable source

3. Time Sensitivity

Fee ranges and concessional caps correct as at 1July 2024
SMSF cost estimates may vary with complexity and provider

4. Bias Assessment

Neutral—compares options without favouring any product or provider