Investment strategy basics

Why it exists

The Superannuation Industry (Supervision) legislation requires trustees to formulate, review regularly, and give effect to an investment strategy having regard to the whole circumstances of the fund - including risk, return, liquidity, insurance for members, and diversification. The ATO publishes dedicated guidance on what it expects to see and how strategies should evolve as the fund changes.

What a strategy typically covers

• Objectives and intended risk/return profile for member benefits.
• Asset classes and ranges (e.g. cash, listed equities, property) and how you will diversify.
• Liquidity to pay benefits, taxes, and costs.
• Whether to hold insurance for members (and if not, why not).
• How you will approach liabilities or LRBAs if relevant.

Review and evidence

Trustees should document reviews (for example annually or when membership, pensions, or asset mix shifts materially). If investments fall outside ranges described in the strategy, you should be able to explain why that remains appropriate or update the strategy - ad hoc exceptions without records draw ATO scrutiny.

Related reading

• ATO: SMSF investment strategy
• Trustee responsibilities
• Superannuation Industry (Supervision) Act 1993 (see professional interpretation for operative provisions)