The trustee of a self managed super fund must formulate an investment strategy that considers all the entities circumstances, including:

• the risks involved in making, holding and realising, and the likely return from, the investments. In doing so, the trustees must have regard to its objectives and expected cash flow requirements;
• the composition of the entity’s investments as a whole, including the extent to which the investments are diverse enough to mitigate inadequate diversification risk;
• the liquidity of the smsf’s investments, in the context of the fund’s cash flow requirements;
• the ability of the self managed super fund to discharge its existing and prospective liabilities.

A self managed super fund must operate within the boundaries of its investment strategy. If a SMSF acts in contravention of its investment strategy, then the fund is in breach of the Superannuation Industry Supervision Act 1993.

Return to Self Managed Super Funds.