Choosing Your TermPlus Investment Term: A general guide for SMSF’s

In my previous article, “Building an SMSF Allocation Framework with Fixed Term Investment Accounts”, we explored how global private credit may fit within SMSF portfolio construction and the operational considerations trustees face when evaluating fixed term investment products. This follow-up article goes deeper to provide an overview on how SMSF trustees can think about mapping their specific investment objective, allocation size, risk tolerance, investment horizon, and liquidity needs to the right TermPlus term and portfolio position. TermPlus offers three term lengths: 1 Year, 2 Year, and 5 Year. Each underpinned by the same diversified and professionally-constructed underlying portfolio quality management framework, and in-built layers of account protection, but they cater to different set of trustee circumstances. As part of integrating TermPlus into a well-constructed SMSF investment strategy, my aim is to explain which term class and what allocation size may be appropriate based on the SMSF goal. The process of product selection should help the SMSF trustee get clarity on:

• What is this product designed to achieve e.g. growth, income, or preservation?
• How much of the SMSF portfolio should this realistically represent?
• What risk level is appropriate for this product, and does it match the SMSF goal?
• What is the commitment period for capital?
• How can the SMSF access capital, and under what conditions?

The Four Dimensions of SMSF Fit

1. Investment Objective: Primary Goal is Income Distribution

TermPlus fixed term investment account’s primary goal is income distribution. Capital Growth can be achieved as a secondary construct through monthly income re-investment. What this means for trustees: TermPlus is designed and intended as an income-generating allocation. The product aims to provide monthly income distributions at a rate calculated by reference to the RBA Official Cash Rate plus a fixed spread, net of all fees and costs. For SMSF trustees, this positioning is a positive feature, not a limitation. Most SMSFs in accumulation or pension phase need reliable income to meet ongoing obligations whether pension payments, operational costs, or the cash management requirements of the fund. For growth, SMSF trustees can reinvest the monthly income for compound returns.

2. Intended Product Use: Strategic Defence

This is practically the most important dimension on how to leverage TermPlus in SMSF portfolio construction TermPlus is intended to be a diversifying allocation by being a component within a broader SMSF portfolio. Allocation guidance: For most SMSF trustees, a position between 5% and 25% of investable assets represents the consistent range. An allocation of up to 25% sits at the upper end of target market; an allocation of 10% is a meaningful allocation to build strategic defence capabilities in the portfolio. This allocation discipline matters to manage two aspects:

• First, it reflects the product’s profile. Even with well-managed global private credit, SMSF trustees should circumvent concentration risk by diversifying across different asset classes for a blended return profile to suit their goals.
• Second, it reflects the liquidity characteristics because fixed term products have committed investment timeframes and liquidity events should be planned for and managed as needed.

A practical approach for SMSF trustees is to treat TermPlus as part of a broader fixed income and alternative income bucket. A trustee with 30–40% allocated to defensive income assets might hold 10–25% of total investable assets in TermPlus, representing a meaningful allocation within the defensive bucket while staying well within prescribed allocation ranges.

3. Risk and Return Profile: Medium

It is important for allocators to be mindful that TermPlus is not a bank, and so the feature of a government guarantee (which would then categorise TermPlus as low-risk / cash-like allocation) does not apply. Importantly, Global Private Credit benefits from

• lender protections,
• contractual covenants and senior security,
• structural tailwinds
• payment priority to the lender,
• very low historical loss rates, and
• valuation methodologies that can look through short-term market volatility.

These protections have historically supported lower default rates and higher recovery rates in private credit assets, a characteristic reflected in the portfolio. For pension-phase trustees: Monthly income distributions make TermPlus suitable for SMSF members who have some capacity to absorb potential portfolio variability as distinct from capital-guaranteed or bank-deposit structures. The portfolio view principle also works in the other direction. An SMSF with a high or very high overall risk profile, which typically holds a significant allocation to equities, listed property, or other growth assets, can hold a TermPlus allocation at a lower risk level as a deliberate portfolio construction choice. representing the risk characteristic of this specific allocation within a broader, more growth-oriented fund. For these trustees, a TermPlus allocation serves a different purpose than it does for a conservative fund. It provides the option of reliable monthly income and capital stability as a counterweight to higher-volatility growth assets.  This kind of defensive income anchor reduces the need to sell growth assets in a down market to fund pension payments or operational costs. In this context, TermPlus is not a compromise; it is a strategic choice.

4. Investment Timeframe: Matching Term to SMSF Horizon

This is where the three term classes diverge, and where the trustee’s specific investment horizon becomes the determining factor. The minimum investment timeframe is a defining factor of each term class:

Term class	Minimum timeframe	Key benefit	Best suited to
1 Year Term Class	1 year minimum	Flexibility and shorter commitment	Accumulation or pension with near-term cash flow needs
2 Year Term Class	2 years minimum	Balance of term premium and flexibility	Accumulation or pension with medium-term horizon
5 Year Term Class	5 years minimum	Maximum illiquidity premium	Long-horizon accumulation; younger members

For SMSFs with members at different life stages, the ability to ladder across term lengths is a practical advantage. A fund with two members,  one in accumulation phase at 52 and one in pension phase at 65, might position the pension-phase member’s allocation in the 1 Year Term Class for flexibility, while the accumulation-phase member’s allocation sits in the 2 Year or 5 Year Term Class to access a greater illiquidity premium. Laddering by staggering maturity dates across multiple term accounts is a strategy discussed in the first article in this series. The existence of three distinct term lengths in TermPlus makes this more practical, allowing trustees to create a structured series of maturity events across a 1-to-5-year horizon.

Applying the Product Fit dimensions to SMSF Portfolio Construction

The Accumulation Phase SMSF

For SMSFs in accumulation phase, capital preservation and income are secondary to long-term return generation, so the allocation framework can leverage growing popularity of global private credit within institutional portfolios as a return-enhancing, diversifying allocation within a balanced or growth-oriented fund. A typical accumulation-phase SMSF might hold 60–70% in growth assets (Australian and international equities, listed property) and 30–40% in defensive assets (cash, fixed income, alternatives). Within the defensive bucket, a TermPlus allocation of 10–20% of total investable assets, positioned as a strategic defensive allocation could provide:

• Monthly income distributions that compound within the fund during accumulation
• Diversification away from listed market volatility and Australian property concentration typically found in Australian private credit
• Exposure to global corporate mid-market credit, a highly diversified asset class most SMSF trustees cannot access directly
• An illiquidity premium appropriate for a long-horizon accumulation fund

The 5 Year Term Class is often the most appropriate for accumulation-phase SMSFs, where the trustee has a long investment horizon and is not reliant on near-term capital access. The longer commitment naturally corresponds to a higher income target above the RBA cash rate.

The Pension Phase SMSF

Pension-phase SMSFs face a different set of priorities: reliable monthly income to fund pension drawdowns, capital stability, and sufficient liquidity to meet minimum pension obligations without forced asset sales. TermPlus’s monthly income distribution structure maps well to pension-phase needs, provided the trustee has managed liquidity appropriately. The key considerations are:

• The pension payment obligation must be met regardless of investment performance, trustees have to plan for these obligations and map it to the TermPlus product investment timeframes and feature set.
• The monthly income from TermPlus can contribute to funding pension obligations, reducing the need to liquidate growth assets in down markets
• The 1 Year or 2 Year Term Class may be more appropriate for pension-phase trustees who may need periodic capital access to rebalance the fund

The Transition to Retirement SMSF

SMSFs in transition to retirement where members are drawing TTR pensions but have not yet fully shifted to pension phase may find the 1 or 2 Year Term Class particularly practical. These members are typically in their late 50s to mid 60s, still in accumulation for the majority of their balance, but drawing income from their TTR (Transition to Retirement) pension account. For these trustees, a TermPlus allocation can serve a dual purpose: it generates the monthly income that supplements the TTR pension drawdown, while the fixed term structure maintains the capital discipline required in this transitional phase. The 2 Year Term Class provides a useful middle ground by being long enough to access an improved illiquidity premium, while being short enough to allow periodic portfolio rebalancing as the member approaches full pension phase.

Distribution Conditions and Trustee Compliance

Distribution conditions apply to all investors in TermPlus, including SMSF trustees. Two conditions are particularly relevant:

Personal advice attestation or questionnaire

Retail clients applying to invest in any TermPlus term class may be required to either attest that they have received personal financial product advice for the investment, or complete a questionnaire in the application form that assists to the issuer in determining whether the investor falls within the target market. For SMSF trustees who are investing without personal financial advice, the questionnaire process is a practical tool for self-assessment. Trustees should leverage this questionnaire since it is designed to confirm that the allocation is appropriate for that portion of the SMSF’s investable assets.

Bringing It Together: A Term Selection Framework

Drawing on the above portfolio construction principles, the following framework can assist SMSF trustees in identifying the most appropriate TermPlus term class for their circumstances:

SMSF profile	Termlength option	Suggested allocation	Rationale
Accumulation, long horizon (10+ years)	5 Year Term	Up to 25% of investable assets	Maximum illiquidity premium; compounding income; minimal near-term liquidity need
Accumulation, medium horizon (5–10 years)	2 Year Term (ladder)	10–20% of investable assets	Laddered maturities provide periodic flexibility; still captures term premium
Transition to Retirement	1 or 2 Year Term	10–15% of investable assets	Income supplements TTR drawdowns; flexibility preserved for rebalancing
Pension phase, steady drawdown	1 or 2 Year Term	10–15% of investable assets	Monthly income supports pension funding; capital access at term end for rebalancing
Pension phase, late stage / lower risk tolerance	1 Year Term or assess suitability	5–10% of investable assets	Shorter commitment; maintain high liquidity buffer outside TermPlus

These are illustrative frameworks only. They do not constitute personal financial advice and should be assessed against the specific circumstances of each SMSF and its members.

The Role of TermPlus in a Well-Constructed SMSF

For SMSF trustees building an income-focused allocation within a well-diversified fund, the question is not just whether global private credit belongs in the portfolio, it is

• which term length best matches the fund’s horizon and liquidity profile, and
• what allocation is appropriate given the fund’s overall investment strategy.

Global private credit can play an important role in diversifying income allocation, one that provides return characteristics different from listed equities, cash, and domestic fixed income, with structural protections that support capital preservation over the investment term. TermPlus makes that allocation accessible from $2,000, in a monthly income-distributing, term-certain structure with institutional-grade portfolio oversight.