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SMSF Investment Strategy Guidelines

The key investment objectives and investment strategy principles set out in the ATO Guidelines are:

  • Trustees of SMSFs are solely responsible and directly accountable for the prudential management of their members' benefits, regardless of whether financial or accounting advice is sought.
  • As part of this prudential responsibility, the trustee must prepare and implement an investment strategy for the SMSF.
  • The strategy must reflect the purpose and circumstances of the fund and have regard to the membership profile, benefit structure, tax position and liquidity requirements of the SMSF.
  • The investment strategy must set out the investment objectives and detail investment methods the trustee will adopt to achieve those objectives.
  • It's the trustees duty to make, implement and document decisions about investment fund assets and to carefully monitor the performance of those assets.
  • The trustees must ensure all investment decisions are made in accordance with the investment strategy.

It's important that these guidelines be strictly adhered to, in order to ensure you remain compliant with the SIS Act, which requires trustees formulate and implement an investment strategy that regards the whole circumstances of the fund.  These circumstances must include:

  • The risk involved in making, holding and realising the likely return from the fund's investments with regard to the investment objectives and expected cash flow requirements
  • The composition of the fund's investments as a whole, including taking into consideration diversification and risks to the fund as a result of a lack of diversification
  • The liquidity of the fund's investments, having regard to expected cash flow requirements and the ability of the fund to discharge its existing and prospective liabilities.

Breaches of the investment strategy requirement may result in the fund loosing its complying status and trustees being fined or sued for loss or damages.

For more information about your investment objectives and strategy, call our office on 03 9869 5900 or email us.