Investment Matters

Investment Matters

As a Trustee you have the discretion to decide what your SMSF invests in. You will need to ensure that all investments are consistent with the SMSF’s investment strategy and do not breach the SIS Act or other laws.

You may seek professional investment advice and need to consider the potential income and growth as well as the risks, liquidity, diversification and potential need for life insurance before making any investment.

You are encouraged to ask us should you be unsure as to the legal status of a proposed investment.

We do not provide investment advice or investment products.

Trustees are required to formulate an Investment Strategy to provide a framework for making investment decisions. The strategy deals at a high level. It is not intended that it focus on specific investments. Each year the Fund auditor will check the Investment Strategy against the Fund activity to certify that they match.

When preparing the investment strategy, trustees need to consider:

  • diversification (investing in a range of assets and asset classes)
  • the risk and likely return from investments, to maximise member returns
  • the liquidity of fund’s assets (how easily they can be converted to cash to meet fund expenses)
  • the fund’s ability to pay benefits when members retire and other costs the fund incurs
  • the members’ needs and circumstances (for example, their age and retirement needs)
  • the need for insurance.

Trustees are required to update the investment strategy regularly – at least yearly. Where the strategy has not changed a yearly minute is required to confirm this and also to show that the investment strategy has been reconsidered.

Reserves require a separate investment strategy or separate treatment within the fund investment strategy.

If the Fund is investing in derivatives other than to hedge an existing portfolio then an additional Risk Statement is required.

Our administration systems enable Funds to invest in any legal investment subject to the Fund’s Trust Deed, Investment Strategy and relevant legislation. We do not provide investment advice however we can assist to determine if a particular investment is legally allowable.