The 29-year-old won his first major at St Andrews in July and also claimed the Players Championship to rise to world number two, before becoming the highest-ranked player to switch to the lucrative circuit.
The Australian is now at number four but other top players who have switched to LIV have plummeted down the rankings.
Former world number one Dustin Johnson, LIV’s individual champion in 2022, has dropped to 46th while 2020 US Open winner Bryson DeChambeau barely scrapes inside the top 100, the American slipping to 96th.
LIV Golf submitted an application to the Official World Golf Ranking (OWGR) board last July but no decision has been announced.
“For sure, it hurts,” Smith said on Wednesday. “I feel as though I was really close to getting to No. 1, and that was definitely something I wanted to tick off.
“I think when you rock up at a tournament, you know who you have to beat, whether there is a world ranking or not. There are generally seven-eight guys that are in that field that you know are going to put up a pretty good fight.
“However, the longer this stuff goes on, I think the more obsolete those rankings become. Do we need them? It would be nice, but you know who you’ve got to beat when you get on the golf course.”
Critics say LIV Golf, which is bankrolled by the Saudi Arabia Public Investment Fund, amounts to blatant “sportswashing” by a nation trying to improve its reputation tarnished by a history of human rights abuses.
Smith will headline a field stacked with LIV golfers at the Asian Tour’s season-opening Saudi International, which tees off on Thursday, with Johnson, DeChambeau, Brooks Koepka and Phil Mickelson all set to compete.