Investment strategy

The rules around SMSF trustees conducting a review of their fund’s investment strategy have been tightened. The review is designed to ensure that the investment strategy continues to reflect the purpose and circumstances of your fund and its members. The trustees are required to regularly review their fund’s investment strategy.

There is no prescribed format for the investment strategy, but it must reflect the purpose and circumstances of the fund and its members.

When preparing your investment strategy, you need to consider the following:

  • Diversification (investing in a range and class of assets)
  • The risk and likely return from investments
  • The liquidity of fund’s assets (how easily they can be converted to cash to meet fund expenses)
  • The fund’s ability to pay benefits when members retire and the ability to pay other costs the fund incurs
  • The members’ needs and circumstances (for example, their age and retirement needs)
  • Whether the fund should hold insurance cover for one or more members of the fund.

Best practice should be for minutes of meetings to provide evidence of the outcomes of the review each year.

RELIANCE AUDITING SERVICES

Reliance Auditing Services is a specialist independent auditing services firm providing quality audits to SMSFs, companies, not-for-profits and AFS licensees all over Australia. Reliance Auditing places a huge emphasis on educating our clients to ensure they fulfil their reporting obligations.Call: 1300 291 060 or email info@relianceauditing.com.au.

DISCLAIMER: This information is an interpretation of rules, regulations and standards. It should not be considered as general or specific advice and neither purports, nor is intended to be advice on any particular matter. No responsibility can be accepted for those who act on the contents of this publication without first obtaining specific advice. Liability limited by a scheme approved under Professional Standards Legislation.