Managed funds are becoming less popular among self-managed super fund trustees, a new study from Investment Trends and Vanguard has found.

As self-managed super fund (SMSF) investors continue to hunt for sources of sustainable investment return amid ongoing volatility, some assets are becoming more popular, while others are falling away.

Exchange-traded funds are growing in popularity among SMSFs--in line with the global trend for these passive vehicles--while managed funds are on the decline, according to the 2017 Vanguard/Investment Trends SMSF Report.

"We're seeing a big change in how [SMSFs] are looking to invest their money," says Recep Ill Peker, research director, Investment Trends.

The research is an online study of around 3,000 SMSFs, conducted between February and March 2017.

In the listed investments space, stocks outside the ASX 200 are also becoming more popular. The demand for small-cap shares increased, with around 17 per cent of respondents indicating they intend to increase their holdings, up from 15 per cent a year earlier.

"Some are seeing more opportunities in small caps, and in shares outside the ASX 200, and [we're seeing a] continued growing appetite for managed funds, though not as strong as in previous years," says Peker.

The study found 45 per cent of SMSFs use managed funds within their portfolio, with this number roughly in line with 2016 and only marginally ahead of the 2015 figure (43 per cent).

Cash levels have also been increasing, at the same time as demand for income has risen, the study shows.

"What we're finding is that an increasing share of [SMSF trustees'] cash assets is actually temporarily parked ... once they find the right investment opportunities, they want to invest it," Peker says.

"This is why they're accessing professionally managed funds. SMSF investors tend to have money in excess cash, because they don't know where to put it right now, they don't know what the right way is to balance risk and return."

This is also borne out by the findings that passive investment opportunities are increasingly popular among these investors, including both Australian equities and international equities index funds. They were up by around 3 per cent and 4 per cent, respectively.

"This has been driven by SMSF trustees recognising that the professional managers they sold out of in the past have actually done quite well. So instead of picking the stocks themselves, they actually turn to a professionally managed active or index fund," Peker says.

Conversely, fewer SMSFs intend to invest in actively managed international equities funds over the next 12 months, down to 33 per cent from 38 per cent a year earlier.

More from Morningstar

• Market volatility spurs SMSF investment changes

• Retirees in Australia, NZ among top 10 globally

• Make better investment decisions with Morningstar Premium | Free 4-week trial

Glenn Freeman is a Morningstar senior editor.

© 2017 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.