SuperEasy® - Investment Strategy for Self Managed Superannuation Fund

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Investment Strategy for a Self Managed Superannuation Fund

Under the Superannuation Industry (Supervision) Act 1993 (SISA), management of investments is one of the main responsibilities of the trustees of self managed superannuation funds (SMSF). Trustees are required to prepare and implement the investment strategy (plan) with the aim of increasing and protecting members' benefits for retirement purposes. Trustees must ensure all investment decisions are made in accordance with the investment strategy and should seek investment advice from a professional adviser if assistance is required, this however does not reduce their responsibilities or obligations as trustees of the fund.

Australian Taxation Office (ATO) also recommends the investment strategy is documented. The auditors of your fund will also require a written investment strategy to enable them to check the execution of the investment strategy.

The main objective of the investment strategy is to ensure the fund provides a reasonable degree of capital security through diversification of investments over long period of time, while producing growth, and sufficient liquidity to meet retirement payments and other benefits, as they fall due.

In formulating the strategy the trustees have to observe all the circumstances relevant to any decision, including, but not limited to:

risk involved in making, holding and realising the investments in such a way as to protect member returns
diversification of investing across a number of asset classes
long term view
liquidity of the investments in respect of future cash flow requirements and liabilities

There are no strict guidelines as to how an investment strategy should look like. As long as the main objectives are addressed and documented in writing, the strategy can be a long or a short one. A more detailed strategy will ensure the Australian Tax Office and the auditors of your fund are comfortable with the way you as a trustee are managing the fund.

An investment strategy needs to be reviewed, and if needed amended to reflect the changes that affect the fund or require an action, such as additional money received from contributions to the fund, or a sudden change in the market conditions (stock market correction). The investing strategy needs to be updated at least once for every financial year your SMSF is in existence. Failure to document the investment strategy and inability to provide the document for the audit report will result in a legal obligation of your auditor to raise the contravention report with the ATO.

Investing your fund's assets disregarding the investment strategy you have outlined for your fund will also result in contravention issues.

SuperEasy Pty Ltd is not licensed to provide advice on investments, or legalities of the types of investments that you can have. SuperEasy® strongly recommends that you seek professional advice before making any investment choice or decision!

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