Exchange traded funds (ETFs) now account for almost a third of the listed investments held by advised self-managed superannuation (SMSFs) as more planners turn to them as a building block of portfolios.

An annual AUSIEX report, SMSFs Under Advice, found the trend towards the use of ETFs in advised accounts was in direct contrast to their still limited use in self-directed SMSFs.

The AUSIEX analysis focused on the trading habits of SMSFs that use its popular wholesale trading platform. The findings suggest advisers and SMSF trustees often draw on ETFs to gain broad exposure to assets not easily accessible to retail investors.

International equity products, for example, accounted for 48.7% of the ETF holdings of advised investors at the end of 2024, led by investments in “global strategy” ETFs (which adopt more specific strategies than broad index-tracking products).

Self-directed investors allocated more overall (50.8%) to international equity ETFs but displayed a greater eagerness than advised clients to chase gains in specific markets. This was most apparent in the former’s 18.4% allocation to US equity ETFs versus the more moderate 9.3% of ETF holdings that advised SMSFs allocated to the same products.

“More advisers, and their clients, are incorporating international shares into portfolios. Previous perceptions of Australian investors as having a home bias are fading as ETFs and trading technology give them better access to global markets,” says Brett Grant, Head of Product, Customer Experience and Marketing at AUSIEX.

Beyond shares

Advisers also appear to be using ETFs to overcome the well-known barriers to entry that make it difficult for retail investors to gain meaningful exposure to Australia’s bond market. 

Domestic fixed income ETFs accounted for 14.4% of advised SMSFs’ overall ETF holdings in a sign of the asset allocation expertise that advisers offer clients. Self-directed SMSF trustees appeared less convinced of the merits of diversification across asset classes, investing just 4.4% of their ETF holdings in fixed income products and another 2.4% in cash ETFs.

“The key attributes of ETFs – including cost-effectiveness, relative liquidity and tax efficiency – appear to resonate strongly with advisers seeking efficient diversification tools,” Grant says. 

The top 10 ETF holdings for advised SMSFs by value at February 2025 included not just typical core holdings such as the Vanguard MSCI Index International Shares ETF (ASX: VGS) and iShares S&P 500 AUD ETF (ASX: IVV). Others to feature in the top 10 included the VanEck MSCI International Quality ETF (ASX: QUAL), the VanEck Global Infrastructure ETF (Hedged) (ASX: IFRA) and Betashares’ Nasdaq 100 ETF (ASX: NDQ). 

The top ETF holdings for self-directed SMSFs were largely similar but held at different weightings in portfolios. One exception is Betashares Global Cybersecuritqy ETF (ASX: HACK) which is the among the most-held ETFs by self-directed SMSFs but absent from the top holdings of their advised peers – a difference which again highlights the propensity of unadvised investors to take relatively big positions.

New horizons

SMSF trustees’ interest in cryptocurrency jumped in late 202  4, likely fuelled by a surge in the price of Bitcoin triggered by the election of US President Donald Trump (who is an advocate of crypto generally).

In fact, the combined value of SMSF trades in cryptocurrency spot price ETFs and crypto infrastructure ETFs more than doubled across all accounts in the final quarter of 2024.

It appears to have been a strategy that – so far at least – has worked in favour of investors. The value of crypto holdings in advised SMSFs more than quadrupled over 2024 and holdings in self-directed SMSF portfolios rose by 380%, albeit from a low base.

“There are many considerations for advisers with clients who have an interest in cryptocurrency, not least of which is the volatility of the asset class. But ETFs do appear to provide a mechanism by which some advisers are comfortable including it as a small proportion of their clients’ asset allocation if appropriate,” Grant says.

Demand for thematic ETFs was also evident in a moderate increase in holdings in products related to ESG, global healthcare and battery technology.

The number of advised SMSF accounts holding thematic ETFs focused on current and emerging trends rose by 13.2% in 2024 and by 15.7% for self-directed SMSFs. 

ETFs appear firmly entrenched as an investment vehicle of choice for financial advisers and their SMSF clients. As more ETFs come to market, the products will likely feature as a staple of even more portfolios alongside direct equities.

Download our research paper – SMSFs Under Advice: a comparative analysis of advised and self-directed SMSF accounts.