Trustee Directed Investment Strategy
Prepared on behalf of the trustee(s) of:
Name of SMSF
Date Prepared: [Strategy Date]
Introduction:
Under Section 52(2)(f) of the Superannuation Industry (Supervision) Act 1993 (SISA) the trustee(s) of a fund must prepare and implement an investment strategy.
Specifically the investment strategy needs to take into consideration the following:
§ The risk involved in making, holding and realising, and the likely return from the investments of the fund in regards to the cash flow requirements of the fund
§ The diversification of the investments of the fund
§ The liquidity of the investments of the fund taking into consideration the expected cash flow requirements
§ The ability of the fund to discharge its liabilities as and when they fall due
It is the duty of the trustee(s) of the fund to make, implement and document about the investment of the assets of the fund and to monitor the performance of those assets.
General Policies and Objectives:
This investment strategy document seeks to achieve the following:
§ Set out the investment objectives of the fund and detail how the trustee will invest the assets of the fund to achieve those objectives
§ Ensure appropriate selection of investments to reduce or remove the risks associated with reckless, ad hoc or uneducated investment decisions
§ To make certain that all investments are made in accordance with the sole purpose test and all other investment provisions and restrictions contained within the SISA and the trust deed of the fund
§ Establish appropriate review criteria and frequency to determine the performance and continued appropriateness and monitoring of the investment strategy
§ Ensure that any professional advisers utilised by the trustees take into the account the needs of the individual members of the fund as well as the fund as a whole
Fund Details:
Fund Name: / <Name of SMSF>Name of Trustee(s) / <Name(s) of trustee(s)>
Number of Members: / 1-4
Members in Accumulation Phase? / 1-4
Members in Pension Phase? / 1-4
The fund is maintained as a self managed superannuation fund under the Superannuation Industry (Supervision) Act 1993 (SISA). The trustee(s) intend to continue to comply with the SISA and remain a complying self managed superannuation fund.
Member Details:
The members of the fund are as follows:
Member Name / Current Age / Years to Retirement / Risk ProfileChoose an Item
Choose an Item
Choose an Item
Choose an Item
Investment Objectives:
To achieve the investment objectives of the fund, the trustee(s) will adopt a pooled investment strategy which will cover all assets of the fund for all members and reserves.
The trustee(s) recognise that in pursuing the investment strategy they are exposing the members of the fund to a Choose an item level of volatility and risk.
The trustee(s) are aiming to achieve the following percentage investment returns over a rolling select time frame year period:
Income returnCapital growth
Total return
- or -
Select Return % above inflation
The trustee(s) have taken into consideration the financial goals and investment time frame of the members, are aware of the impact of taxation and inflation and therefore believe the following asset allocation will achieve the above financial return.
Asset Allocation:
The trustee(s) have resolved that in order to achieve the preceding investment objectives, the assets of the fund will be invested in the following asset classes and managed around the following ranges:
Asset Class / Benchmark / RangeAustralian Equities / 0% / 0% - 0%
Australian Fixed Interest / 0% / 0% - 0%
Cash / 0% / 0% - 0%
Direct Property / 0% / 0% - 0%
International Equities / 0% / 0% - 0%
International Fixed Interest / 0% / 0% - 0%
Listed Property / 0% / 0% - 0%
Mortgages / 0% / 0% - 0%
Other / 0% / 0% - 0%
Total / 100%
The trustee(s) believe that the above level of diversification is appropriate and will also provide the necessary level of income and capital growth to enable the investment goals of the members to be met.
Utilisation of Borrowings:
The trustee(s) have decided that they will / will not utilise limited recourse borrowings which are permitted under s67A of the SISA.
Where the trustee(s) elect to utilise borrowings, it has been determined that the borrowing is suitable and consistent with the risk tolerance of the members, and the following factors have been reviewed before entering into the borrowing arrangement:
§ the additional risks involved in the purchase of the asset(s) for which the limited recourse borrowing is being utilised
§ the expected return from the asset(s) held under the limited recourse borrowing
§ the overall level of diversification of the fund
§ the impact on the cash flow and general liquidity of the fund resulting from the fund taking on the limited recourse borrowing arrangement
§ the length of time until the member retire
§ additional insurance which may be required
Performance Monitoring:
In order to effectively monitor the performance of this investment strategy the trustees will compare the investment performance of the fund against either the benchmarks specified below for the relative asset classes or alternatively against a suitably selected group of superannuation master trusts.
Asset Class / Benchmark / IndicesAustralian Equities / All Ordinaries Accumulation Index
Cash / Average earnings of cash management accounts / trusts
Fixed Interest / Commonwealth all series all maturities and Accumulation Index
Direct and Listed Property / Average of composite Property Accumulation Index
The trustee(s) will analyse the actual investment performance of the fund against the abovementioned benchmarks on an annual basis on the completion of the financial year accounts.
Investment Restrictions:
In accordance with the SISA the trustee(s) of the fund will not:
§ Lend money of give other financial assistance to a member or a relative of a member of the fund
§ Intentionally acquire an asset from a member or relative of a member unless it meets the following conditions:
o The asset is either business real property
o Or a listed security or units un a widely held trust (such as a managed fund)
o And is acquired at market value
§ Borrow any funds, excluding the allowable exceptions listed in s67 and s67A (limited recourse borrowings) of SISA
§ Make a loan to, or an investment in, a related party of the fund which will cause the fund to breach the in-house asset limit of 5% of the fund’s assets
§ Acquire any assets for amounts other than arms-length consideration
§ The trustee(s) will ensure that all investments of the fund are maintained entirely to ensure compliance with the sole purpose test as outlined in the SISA
Acceptance of Investment Strategy:
Signed:
Trustee / Director #1 Name / Trustee / Director #3 Name*Trustee / Director #2 Name* / Trustee / Director #4 Name*
*Delete where not applicable
Minutes of Trustee Meeting<Name of SMSF> (‘the fund’)
Purpose of Meeting – Acceptance of Investment Strategy
Attended by trustee(s) of <Name of SMSF>
Held at: <Trustee Address>
Date: [Meeting Date]
Present: / Member 1, Member 2, Member 3, Member 4Chairperson: / Member 1 was appointed Chairperson of the meeting.
Acceptance of Investment Strategy: / Following a review of the investment strategy document prepared by the trustees, it was agreed that the trustee(s) would accept and implement the investment strategy and make all investments in accordance with that statement.
Meeting Closed: / There being no further business the meeting was declared closed.
Confirmed as a correct record.
Member 1
A note regarding member risk profiles:
To determine the applicable risk profile for the members of the SMSF, have each individual member complete the Colonial First State Risk Profile Tool (will open in your web browser).
Upon completion, each member will be presented with a one of six risk profiles which most closely represents their attitude toward investment risk.
Select the corresponding risk profile from the drop down list contained within the member details table:
This investment strategy document is only for use where a pooled investment strategy for 100% of the assets of the funds is being implemented. This means that the trustees of the SMSF are not giving each member their own separate (segregated) investment strategy.
This means that where there is more than one member of the SMSF, and the members have different risk profiles, the trustee(s) need to decide on an investment strategy that will satisfy all members.
For example a proportional approach (based on the members’ account balances) could be used to determine an appropriate asset allocation.
1 / Copyright © 2011