Do you have an investment strategy?

Trustee of a Self Managed Superannuation Fund? – Its time to consider your investment strategy

The past months have been full of changes to the superannuation laws that have affected the self-managed super funds (funds) of many of our clients. However, a funds investment strategy is something that all of our super fund trustees should be mindful of. This year the LBW super team together with the super fund auditors are focusing on ensuring investment strategies are on file and current for each of our SMSF clients. c

The ATO states that a funds investment strategy should be in writing and outline investment objectives together with specifying the type of investments the fund can make. The ATO requires that the trustees of the fund review the investment strategy yearly to ensure it continues to reflect the purpose and circumstances of a fund and its members. c

The preparation and review of the fund’s investment strategy should consider the personal circumstances of all the fund members, including age and risk tolerance. When deciding which assets to invest in there must be a clear and obvious retirement purpose in the choices made. It is important for trustees to remember that the investment objectives they have set for their SMSF can be changed at any time.

In reviewing an investment strategy the key points for consideration include:

  • diversification (investing in a range of assets and asset classes);
  • liquidity of the fund’s assets (how easily they can be converted to cash to meet fund expenses);
  • the fund’s ability to pay benefits (pension streams when members retire) and other costs it incurs
  • the members’ needs and circumstances (for example, their age and retirement needs).

In keeping on top of trustee obligations remember that there is no template for an investment objective and strategy, but it is important to make sure the strategy reflects how you intend to invest your SMSF’s money. The investments you actually make must also be contemplated by the investment strategy you have set. As a trustee if you believe an investment made does not fit within the investment strategy it is required that the investment strategy be revised to ensure all investments are in line with the strategy.

What next?

If you think your investment strategy might be in need of review or updating please contact our superannuation team and we would be more than happy to assist. As part of completing each super funds 2017 year-end work we will be reviewing investment strategies and ensuring a current strategy is on file.

Feel free to contact the super team on 5221 6111 for any questions or queries.

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