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What is an Investment Strategy?

As a trustee of a SMSF you are required by law to prepare and implement an investment strategy that provides for the:

1.    Circumstances of all members of the fund;

2.    Risks involved in making, holding and realising assets;

3.    Diversification of the fund portfolio;

4.    Likely return on the investments;

5.    Cash flow requirements of the fund (i.e., can the fund pay its tax liabilities and other compliance costs).

Furthermore, the trustees have a duty to execute and document the decisions about investing within the fund and should monitor the performance of the assets.

The investment strategy should be reviewed from time to time and in particular when a change such as the following occurs:

1.    Marriage breakdown;

2.    New member enters the fund;

3.    Commencement of a pension by 1 or more of the members;

4.    There is a change in the risk tolerance of the members; and

5.    A member dies.