Investment Strategy Formulation and Review
Every SMSF is legally required to have a documented investment strategy. But a strategy that exists only to satisfy a compliance obligation is not working hard enough for your fund. We develop and maintain a personalised, compliant investment strategy for your SMSF that reflects your risk profile, your time horizon, and your retirement objectives, and we review it regularly as your circumstances change.
Most SMSF Investment Strategies Are Written Once and Never Looked at Again.
Every SMSF trustee knows they are required to have an investment strategy. What most do not appreciate is that the ATO’s expectation goes well beyond having a document on file. The investment strategy is the governing framework for every investment decision your fund makes. It must reflect your current circumstances, be reviewed regularly, and be genuinely followed by the trustees.
The reality across the SMSF sector is quite different. Most funds have an investment strategy that was prepared at establishment, filed with the trust deed documents, and never reviewed since. The fund’s actual investment mix may have drifted significantly from what the strategy contemplates. The strategy may not address asset classes the fund now holds, including property, cryptocurrency, or international equities. And the document may not reflect the current age, risk profile, or retirement timeline of the fund’s members.
This creates two problems simultaneously. The first is a compliance problem. A fund whose investment strategy does not reflect its actual investments or current member circumstances is in breach of its trustee obligations under the Superannuation Industry (Supervision) Act. The second is a strategic problem. A fund operating without a current, relevant investment strategy is making investment decisions without a framework, which means opportunities are missed and risks are taken without proper consideration.
At New Wave SMSF, we develop investment strategies that are genuinely personalised, properly documented, and actively used as the framework for your fund’s investment decisions. We review them regularly, update them when circumstances change, and ensure they always reflect the current position of your fund and its members.
This information is general in nature and does not constitute personal financial advice. Before acting on any information on this page, please seek advice from a qualified financial adviser.
What Our Investment Strategy Service Covers
We develop, document, and maintain a compliant and genuinely personalised investment strategy for your SMSF across every asset class your fund holds.
Initial Investment Strategy Development
We develop a comprehensive investment strategy for your fund based on a thorough assessment of your members’ ages, risk profiles, time horizons, retirement objectives, and liquidity needs. The strategy sets out the fund’s investment objectives, the target asset allocation across each asset class, and the approach to managing risk and diversification within the fund.
Regular Strategy Reviews
We review your fund’s investment strategy at least annually and whenever a material change occurs in your circumstances or the fund’s investment mix. A strategy review is not a tick-box exercise. It is a substantive assessment of whether the current strategy remains appropriate and whether any adjustments are needed in response to changed conditions or objectives.
Asset Allocation and Diversification
We develop an asset allocation framework for your fund that balances growth and defensive assets in a way that is consistent with your risk profile and time horizon. We address diversification across asset classes, geographies, and investment types to ensure your fund is not over-concentrated in any single investment or sector.
Property and Alternative Assets
Where your fund holds or intends to hold direct property, listed infrastructure, cryptocurrency, or other alternative assets, we ensure your investment strategy specifically addresses these asset classes. Holding assets that are not contemplated by your investment strategy is a compliance breach regardless of the investment’s performance. We close that gap before it becomes a problem.
Insurance Consideration
The investment strategy must address whether the trustees have considered the insurance needs of each member. This is a specific regulatory requirement that is frequently overlooked in strategies prepared without specialist support. We ensure your strategy addresses insurance consideration for every member and that the fund’s position on insurance is documented clearly.
Strategy Documentation and Trustee Resolutions
We prepare all documentation associated with your investment strategy, including the strategy document itself and the trustee resolutions adopting and reviewing the strategy. Every document is prepared to meet the ATO’s requirements and your fund’s trust deed, and every review is formally recorded so your fund has a complete and compliant governance trail.
What the ATO Actually Requires From Your SMSF Investment Strategy
The investment strategy requirements under the Superannuation Industry (Supervision) Act are more specific than most trustees realise. Understanding what is actually required helps you assess whether your current strategy meets the standard the ATO expects.
Under section 52B of the SIS Act, SMSF trustees must formulate and give effect to an investment strategy that has regard to the whole of the circumstances of the fund. Specifically, the strategy must address:
- Risk and Return
The strategy must address the risk associated with the fund’s investments and the likely return from those investments in relation to the fund’s objectives and the retirement needs of its members. A generic statement that the fund will invest in a diversified portfolio is not sufficient. The strategy must connect the investment approach to the specific risk profiles and retirement timelines of the fund’s members.
- Diversification
The strategy must address diversification of the fund’s investments. Where a fund is concentrated in a single asset class or a single investment, the strategy must explain why that concentration is appropriate for the fund’s circumstances. The ATO has specifically noted that a strategy that does not address diversification may indicate the trustee has not given proper consideration to this requirement.
- Liquidity
The strategy must address the liquidity of the fund’s investments and whether the fund will be able to meet its liabilities as they fall due, including pension payments, benefit payments, and operating expenses. For funds holding illiquid assets such as direct property, the liquidity analysis is particularly important.
- Ability to Discharge Liabilities
The strategy must address the fund’s ability to pay its liabilities, including any borrowings under an LRBA, as and when they fall due. This is directly relevant to funds that hold leveraged assets.
- Insurance
The strategy must address whether the trustees have considered the insurance needs of each member. This does not require the fund to hold insurance, but it does require the trustees to have genuinely considered the question and documented their conclusion.
Signs Your SMSF Investment Strategy Needs Attention
These are the investment strategy issues we most commonly identify in funds that arrive at New Wave SMSF from other providers.
Strategy Not Updated Since Establishment
Your fund’s investment strategy was prepared when the fund was established and has never been reviewed. The fund’s actual investment mix has changed, the members are older, and the strategy no longer reflects the current position. This is a compliance breach and a strategic gap that needs to be addressed before the next ATO review.
Asset Classes Not Addressed
Your fund holds direct property, cryptocurrency, or other alternative assets that are not mentioned in the investment strategy. Holding an asset class that falls outside the strategy’s contemplated investments is a breach of the fund’s trustee obligations. The strategy must be updated to address every asset class the fund holds before the next annual compliance cycle.
Insurance Consideration Missing
Your investment strategy does not address the insurance needs of the fund’s members. This is a specific regulatory requirement under the SIS Act and its absence is identified by auditors as a compliance deficiency. Adding a properly considered insurance section to the strategy is a straightforward fix that eliminates this risk entirely.
Strategy Not Connected to Member Circumstances
Your investment strategy reads as a generic document that could apply to any fund. It does not reference the ages, risk profiles, or retirement timelines of the specific members. A strategy that is not connected to member circumstances does not meet the ATO’s requirement to have regard to the whole circumstances of the fund.
Who This Service Is For
- Trustees Whose Strategy Has Never Been Reviewed
Your fund’s investment strategy was prepared at establishment and has not been touched since. You want a specialist team to review the current strategy, identify any compliance gaps, and produce an updated document that reflects your fund’s current position and genuinely meets the ATO’s requirements.
- Trustees Adding New Asset Classes to Their Fund
Your fund is adding direct property, cryptocurrency, or another alternative asset class and you need the investment strategy updated before the acquisition proceeds. You want the strategy to specifically address the new asset class, the rationale for including it, and the risk management approach that applies to it.
- Business Owners With Complex Investment Structures
Your fund holds a mix of listed securities, direct property, and potentially business real property or alternative assets. You want an investment strategy that properly addresses the complexity of your fund’s portfolio and connects the investment approach to your specific retirement objectives and risk profile.
- Trustees Who Have Received an Auditor Finding on Their Strategy
Your fund’s auditor has identified the investment strategy as deficient, either because it is outdated, incomplete, or does not address all asset classes held. You want a specialist team to prepare a replacement strategy that resolves the auditor’s finding and meets the regulatory standard going forward.
The New Wave SMSF Difference
- Strategies That Are Actually Used
We do not prepare investment strategies that sit in a drawer. We use your investment strategy as the active framework for every investment recommendation we make for your fund. When we recommend an asset allocation change or a new investment, we do it within the context of your documented strategy and update the strategy if the recommendation requires it.
- Reviewed Proactively, Not Just Annually
We review your investment strategy whenever a material change occurs in your circumstances or your fund’s investment mix, not just at the end of the financial year. If your business situation changes, if markets move significantly, or if you are considering a new asset class, we review the strategy before any decision is made, not after.
- Integrated With Your Complete Financial Picture
Your investment strategy does not exist in isolation from your tax position, your contribution strategy, your pension planning, and your estate plan. At New Wave SMSF, every investment strategy is developed in coordination with your accountant and legal adviser within the same firm, ensuring the strategy reflects and supports your complete financial objectives.
Is Your SMSF Investment Strategy Working as Hard as Your Fund Should Be?
If your investment strategy has not been reviewed recently, does not address all the assets your fund holds, or was never genuinely tailored to your circumstances, now is the time to address it. Our team is ready to help.
What Our Clients Say
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Disclaimer
This information is general in nature and does not constitute personal financial advice. New Wave Financial Planning Pty Ltd is an Authorised Representative of NWG Financial Services Pty Ltd, AFS Licence No. 538619. The information on this page does not take into account your personal objectives, financial situation, or needs. Before acting on any information on this page, you should consider its appropriateness to your circumstances and seek advice from a qualified financial adviser.