The legislation does not expressly state what types of investments an SMSF can invest in, although there are some regulatory limitations. 

Two of the main rules are the ‘sole purpose test’ and investments being ‘arm’s length’. The sole purpose test holds that all investments must be maintained for the sole purpose of providing retirement benefits to members or their dependants. Being at arms lengths means that investments are conducted independently and at fair market value. All investments should agree with your investment strategy you have in place.

You can find more information on SMSF investment compliance here or further information on what your SMSF can invest in here.