“New data from the Reserve Bank of Australia shows that three-year term bank deposits interest rates fell to just 3.25 per cent in February 2025, well below 4.0 per cent a year earlier,” he said.

“Additionally, online savings accounts returned just 1.7 per cent to savers, down from 1.85 per cent. Compared to inflation at around 2.5 per cent in December 2024, real returns on bank online savings accounts are now well below zero, and the bottom line for cash investors is that savings rates could fall further this year if official rates fall again.”

Arraj said that in such an environment, SMSFs should rethink their cash investments and equity holdings as share market volatility is returning.

He continued that despite equity market volatility, SMSFs invested a significant portfolio of their assets in Australian shares – $277.6 billion in the December quarter, representing 27.2 per cent of all SMSF assets.

“That was down from $281.7 billion in the September 2025 quarter. SMSFs invested a record $168 billion in direct property, accounting for 16.5 per cent of their total assets. However, fixed-income investments accounted for just $11.7 billion of SMSF assets, with another $7.1 billion invested in loans, accounting for just 1.8 per cent of total SMSF assets,” he said.

“With share market correcting, SMSFs would benefit from a more balanced approach to asset allocation, including greater fixed-income allocations, including to private credit. These investments have historically offered attractive yields, which is very important to all investors, particularly as equity markets fall.”

Arraj said the Australian share market had dropped around 4 per cent over the 2025 year to 17 March, contributing to investor insecurity, while in the US, equity markets have dropped by more.

“Heightened uncertainty about US trade tariffs and the threat of a global trade war has pushed many investors to sell equities. Private credit can provide much calmer waters for investors than share markets,” Arraj said.

He added that according to the IMF, private credit has grown rapidly since the global financial crisis, taking market share from bank lending and bond markets following the long period of low interest rates, which drove a huge expansion of alternative investment strategies.

“Private credit returns are robust at a time when falling term deposit and savings account rates are eroding the real return investors get on investments. For SMSF investors seeking higher yield, now is the time to consider reallocating some of their assets to private credit investments,” he said.