In a first for a not-for-profit super fund, the 1.2 million member Hostplus industry fund has opened some of its investment options to self-managed super funds in a significant move to tap into one of the fastest-growing super segments.

Hostplus has opened its doors to six of its 23 investment options to DIY fund trustees in one of the most lucrative parts of the market, in a bid to entice them to invest some of their large cash piles with one of the best-performing industry funds.

Industry super fund, Hostplus, has opened itself up to investment by DIY super funds Peter Braig

As at March 2019, there were almost 600,000 SMSFs in Australia with more than 1.1 million members.

Although this represents less than 5 per cent of Australia’s total population, the funds account for more than $747 billion – or about 27 per cent – of the $2.7 trillion invested in superannuation.

Other not-for-profit funds are expected to follow Hostplus's lead if it proves successful.

Retail super funds – those run by the major banks and big insurers – have become less of a threat to the industry super giants, with a growing number of members switching to industry funds following the damning revelations at the banking royal commission.

In an attempt to retain fund members with significant account balances from leaving to start their own funds, super funds long ago introduced “direct” investment options, where members have an ability to invest directly in shares.

While Hostplus will continue to offer its direct option, Choiceplus, it is allowing those with their own super fund to invest a minimum of $10,000 in six of its "Self-Managed Invest" options, without having to become a member of the fund.

Hostplus group executive of member experience Paul Watson said the Self-Managed Invest options can help DIY fund trustees increase diversification of their investment portfolios in a cost-effective way – and potentially improve investment performance.

The options available to SMSFs include Hostplus' flagship Balanced option, which produced the best return of all "MySuper" balanced investment options in the past financial year, and its low-cost Indexed Balanced option.

The Balanced option also topped the performance tables over three, five, seven and 15 years, according to industry researcher SuperRatings.

SMSFs will also be able to invest a minimum of $10,000 in some of the unlisted investment options run by IFM Investors, which is owned by 27 not-for-profit super funds, including Hostplus.

For example, a DIY fund can sink cash into infrastructure options run by IFM Investors that invest in assets such as airports, toll roads and power plants in Australia and overseas.

Hostplus, which has more than $43 billion in funds under management, started out 31 years ago as the fund for workers in the hospitality, tourism and recreation industries. It is now open to the public.

The fund “soft launched” its Self-Managed Invest options last year.

About 50 SMSFs have so far invested about $15 million with Hostplus, Mr Watson said.

Most of that money is in the Hostplus Balanced option, he said.

Some of the larger retail funds offer investment options to SMSFs but it is understood that none offer access to their My Super investment options.