SMSF and Investment Strategies

SMSF and Investment Strategies

What is an SMSF investment strategy?

That investment strategy needs to take into account the following things:

  • The risk involved in making investments and their likely return;
  • The overall composition of the fund’s investments and their diversification;
  • Liquidity of the investments, in respect of the cash flow requirements of the different members; and
  • The ability of the fund to discharge its existing and prospective liabilities.

It also must show that it has adequately considered the insurance requirements of members and taken out policies, where required, if insurance outside of superannuation is inadequate.

It is not the same as a financial plan or a statement of advice. It is a document, which can be as short as one page, which shows that the trustees of the fund have given appropriate consideration to how the SMSF investments will be managed, as they are required to do so by law.

Julia Fauvette, Senior Accountant