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.