More than 52,000 new SMSFs were established in FY26, the highest number ever recorded, according to new analysis by Class. The total number of funds surpassed 680,000, growth of 7.4 per cent on the year, also the highest total on record.
Class chief executive Tim Steele says the growth has come despite Division 296 and new limits on residential property borrowing. “Firstly, I would say at a macro level, SMSFs have just had the strongest year on record,” Steele says. “Despite the kind of regulatory backdrop and potentially changes in relation to things like Div 296, SMSFs are more popular than they’ve ever been.”
“The themes around control and flexibility, and people taking an interest and being engaged in their super, are already positive things,” Steele says.
Steele says the Div 296 tax change has not deterred even younger members who may cross the $3 million threshold over their working lives.
“I think it’s a problem they’d love to have,” Steele says.
“When someone age 21 enters the workforce and is contributing 12.5 per cent of their super, that beautiful eighth wonder of the world, compound interest, will mean they can grow a material balance over their lifetime.
“I just don’t think the potential risk of, at some stage in your life, having more than $3 million in super, is a deterrent. I half tongue-in-cheek really believe it’s a problem they’d be happy to have, and happy to deal with when it becomes a problem.”
The 2026 Class Annual Benchmark Report, produced by Class in collaboration with Heffron, the SMSF Association and Accurium, draws on data of SMSFs hosted on the Class platform, which Steele says represents around 30 per cent of the total SMSF market.
SMSFs on the Class platform received $14.4 billion in rollovers between FY23 and FY26, about two and a half times the $5.7 billion rolled out over the same period, he says, and “the data is showing us that [for] 57 per cent of the rollovers over FY23 to FY26, the source of those funds is from industry funds”.
“Industry funds represent such a significant chunk of the market, perhaps that’s not completely surprising.
“What is interesting, though, is when you think about that number, is that whilst the rollovers in are two and a half times larger than the rollovers out over that period, for those that do rollover out, two thirds of them are going to a retail platform.”
Steele says Class has not analysed the data to see whether those rolling out of an industry fund were advised, or had a fee deducted from their account.
“There’s no qualitative overlay that we provide, so we can hypothesise on some of these things, but we just share the data and say, isn’t this interesting, that this is where it’s coming from?”
Gen X and Millennials
Generation X, now aged 46 to 60, accounted for 45.1 per cent of new fund establishments in FY26, with Millennials, aged 31 to 45, at 44 per cent. The average age of members joining newly established funds was 47 in both FY25 and FY26, younger than the average age of 62 across all SMSF members in FY24.
Steele says the growing interest among Millennials is noteworthy.
“That age group continues to move,” he says. “Each year it gets a year older, to state the obvious; but it’s still only 31 to 45 [years old], and 44 per cent of establishments are attributable to that age group. It’s pretty amazing. It’s not just the grey-haired 55-year-old. They are getting engaged earlier in their super.”
Steele says direct-to-consumer SMSF establishment options are increasing in popularity and are also becoming more affordable.
“There’s technology and other things meaning that it’s possible for different players to enter the market and offer a really competitively priced solution, both on establishment and on administration, and either because of the investment options that are available on those platforms, or just the cost benefit trade-off, you’ve got people earlier in life choosing to establish an SMSF,” he says.
Establishment size falls
The Class data suggests the average balance of newly established SMSFs was $467,000 in FY25, the most recent year with a reliable sample of lodged tax returns. That average has fallen 5.9 per cent, from $496,000 in FY24. The median balance fell 4.2 per cent over the same period, from $314,000 to $301,000.
“There’s got to be an overlay of age, balance and life stage,” Steele says. “It’s not purely a balance play. There’s certainly a point at which it may make more sense from a financial point of view to consider an SMSF, but there are a whole bunch of people who’ve got very large balances who haven’t, at different stages of life.
“It’s just a question of your own life stage, and your own interest and desire in being more engaged and taking greater control of your superannuation. Life stage matters, and your willingness to be really engaged in your super is an important point.”
When an SMSF is established, it is typically invested 100 per cent in cash, but its asset allocation generally shifts reasonably rapidly. The Class report shows that for SMSFs established in FY23 through to FY25, cash and term deposits fell from 33.1 per cent of assets to 16 per cent over the period.
Direct property rose from 28.2 per cent to 35.4 per cent, becoming the largest single allocation. By FY25, the FY23 establishment cohort held more direct property, at 35.4 per cent versus 22.1 per cent, and fewer Australian equities, at 11.5 per cent versus 26 per cent, than the broader SMSF population.
“They will typically land in an SMSF as cash, and then the question is how quickly do they move out of cash into other asset classes, and which asset classes are they moving to,” Steele says.
“Direct equities remain the most popular asset category in SMSFs. ETFs are continuing to grow, and I don’t think that’s surprising when you think about the broad range of SMSFs and the relative cost effectiveness of ETFs. It mirrors what you’re seeing outside of super, in terms of the appeal of some of those very large global ETF players.
“The really compelling stat is that over FY23 to FY25, you’ve seen cash and term deposits effectively more than halve over that period.”
The Class research identified 3672 new residential property limited recourse borrowing arrangements (LRBAs) in FY25, an increase of 46.8 per cent from FY23. Residential property accounted for 92.7 per cent of Class SMSFs’ LRBA holdings by number in FY25, and the investment activity it tracks suggests there were around 11,500 new residential property LRBAs created sector-wide in FY25.
Newly established funds held only one in three of those new residential LRBAs, with the remaining two-thirds belonging to existing SMSFs.
“We were somewhat surprised to see that only one in three new residential LRBAs were attributable to establishments, but the other two out of three were for existing SMSFs,” Steele says.
“We were as surprised as the rest of the market when the changes were announced in regards to the restrictions on residential LRBAs, and probably thought it was going to have a more profound impact than the data suggests on the attractiveness of SMSFs for establishment.
“But when only one in three residential LRBAs is actually linked to an established fund, I thought it’s probably going to have less impact than we might have initially thought it would.”
Cost-base election
At 30 June 2026, 72.8 per cent of Class SMSFs had a positive net unrealised capital gains tax position. Among funds with at least one member balance above $3 million, 95.5 per cent recorded a positive position, and funds with a member balance above $3 million but below $10 million averaged $2.2 million in unrealised gains.
In FY26, 8.8 per cent of Class SMSFs had at least one member balance above $3 million, while a further 9.4 per cent had at least one member balance between $2 million and $3 million.
To calculate Division 296 fund earnings, an SMSF can elect to make a capital gains tax adjustment to the cost base or reduced cost base of its CGT assets to the market value of those assets as at the end of 30 June 2026. The deadline for making this election is the FY27 return date of 31 October 2027.
“What we’re really saying is that a much larger population of funds are going to need to be considering whether they make a cost base election than those that are currently in that $3 million cohort,” Steele says.
“We’ve got 8.8 per cent who have at least one member with a balance above $3 million, but there’s another over 9 per cent who are at that balance between $2 million and $3 million, and they’re going to need to be making an election on cost base as well.
“It’s not purely those that are currently caught by Div 296. Even though you might have ordinarily thought you’ve got a lot of time to think about this because, based on contributions and returns, it’s going to take another five or six years to potentially get to $3 million, they’re [still] going to need to make this one-off election in this return year.”
This article was edited on 15 September to update the percentage of Class SMSFs that have at least one member balance above $3 million.
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