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SMSF Investment Strategy

As required by SIS Act and related regulations, your SMSF must have an investment strategy in writing.

You need to review the investment strategy regularly and make investment decisions based on investment strategy.

The investment strategy must be provided to the SMSF auditor on annual basis during the audit process.

Key element of the investment strategy:

  • SMSF’s investment objectives
  • diversification
  • SMSF’s liquidity
  • insurance cover
  • member’s individual needs and goals

The investment objectives can be achieved as below:

  • a net return above the inflation rate over a rolling average of five yeas:
  • appropriate diversity, in line with expected risk and return;
  • appropriate liquidity, in line with the Trustee’s expected future net cash flows with a particular emphasis on meeting obligations to pay member retirement benefits; and
  • appropriate risk connected to making, holding and realising investments including any risk connected to inadequate diversification.

Investment diversification can be achieved as below:

The Trustees confirmed the Fund may invest in:

  • equities, including dividend reinvestment programs and similar arrangements;
  • property trusts and associated investments;
  • managed investments and associated products thereof;
  • direct property investment;
  • derivatives of the above;
  • crypto currency, and
  • any other investment permitted by its trust deed.

The Trustees considered the Fund’s mix of investments, including its diversity and liquidity, and resolved that this mix of investments suited the Fund and optimised the interests of the members and their retirements.

Insurance matters and other matters can be included in the investment strategy as below:

The Trustees considered the Fund’s existing position regarding life insurance, trauma insurance, total and permanent disability insurance and income continuance arrangements for members, and similar insurances. The Trustees then resolved that this position was appropriate to the circumstances of Fund and the members and no changes were needed.

The Trustees considered the Fund’s existing position regarding other matters required to be considered by the Trustees under the Superannuation Industry (Supervision) Act and related regulations and resolved that the existing position was appropriate to the circumstances of Fund and the members.

Investment records and accounting can be specified in the investment strategy as below:

The Trustees resolved to keep the assets of the Fund separate from those held by the Trustees in any other capacity and to ensure that wherever practicable assets were recorded by other persons as being owned by the Trustees in their capacity as trustees of the Fund.

The Trustees resolved to value assets at market value for reporting.

Regular and ongoing reviews can be included in the investment strategy as below:

The Trustees confirmed that the Fund’s investment strategy will be regularly reviewed. These reviews are on-going and occur frequently as the Trustees apply their minds to the Fund’s investments including risk, diversity and liquidity. The Trustees note that due to their ongoing and informal nature, and high frequency, these reviews were not recorded in the minutes of the Trustees’ meetings.

The Trustees resolved to continue to regularly review the Fund’s investment strategy and all other strategies required to be regularly up-dated under the Superannuation Industry (Supervision) Act and related regulations.

The Trustees resolved to complete these reviews as frequently as needed to comply with the Superannuation Industry (Supervision) Act and related regulations. The Trustee noted that many of these reviews would not be recorded in the minutes of the meetings, due to their informal nature and high frequency.

The Trustees resolved to formally record these on-going investment strategy reviews once a year in writing, or when an event occurred requiring a significant change to the Fund’s investment strategy.

 

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