What Must be included in an SMSF Investment Strategy?
An SMSF Investment Strategy must be documented, regularly reviewed, and address the fund's investment objectives, diversification, liquidity, ability to meet liabilities, and whether the Trustees have considered insurance for members, in line with the requirements of the Superannuation Industry (Supervision) Act 1993.
What does the law require an SMSF Investment Strategy to cover?
The Investment Strategy needs to reflect the personal circumstances of each member, including their risk profile, and address diversification, liquidity, the fund's ability to meet its liabilities, and whether the trustees have considered holding insurance for members.
How often should the Investment Strategy be reviewed?
The legislation requires the strategy to be regularly reviewed, not just documented once and filed away. Most SMSF auditors expect to see it updated, or a signed minute confirming it has been reviewed and remains appropriate, at least annually.
Does the Investment Strategy need to address insurance?
Yes. Trustees are required to consider insurance for members as part of the Investment Strategy, and to document that decision, since SMSF membership doesn't automatically come with insurance the way some other super funds do.
What happens if the Investment Strategy is not properly documented?
Auditors are required to check that the Investment Strategy meets legislative requirements. A strategy that doesn't sufficiently address diversification, liquidity, insurance or the personal circumstances of members can result in an audit query or a request for the strategy to be reworked.
Frequently asked questions
Does every SMSF need a written Investment Strategy?
Yes, it's a legislative requirement for the Trustees to prepare, give effect to and regularly review a written Investment Strategy.
What happens if my SMSF lacks diversification?
Trustees are required to document their reasoning where a lack of diversification exists, such as a large property holding, so the auditor can be satisfied it was a considered decision.
Who checks the Investment Strategy each year?
The SMSF's independent auditor reviews the Investment Strategy annually as part of the compliance component of the audit.
Need help documenting or reviewing your SMSF Investment Strategy? Contact Lifetime SMSF on 1300 031 943 or visit lifetimesmsf.com.au to talk to a specialist.
This information is general and factual in nature. It is not financial product advice, legal advice or tax advice. Lifetime SMSF Pty Ltd is not licensed to provide financial product advice under the Corporations Act 2001. If you require personal advice, consult an appropriately licensed or authorised financial adviser.