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Is it time to review your SMSF's investment strategy?

A recent article in the Australian Financial Review reported on the increasing popularity of exchange traded funds (ETFs) as an investment option for SMSFs.

Trustees should be aware that if they intentionally or even accidentally invest in an asset type not permitted under the fund's investment strategy, the trustees will be in contravention of the investment strategy and, likely, the governing rules of the SMSF.

Aside from the legislative requirement, this highlights the importance of regularly reviewing a fund's investment strategy.

Cassandra Townsend, Thomson Reuters

In our earlier ClearLaw article titled "The importance of a comprehensive SMSF investment strategy", our lawyers at Maddocks outlined the SIS Act and Regulations requirements around SMSF investment strategies.

Under the law, a trustee must regularly review the fund's investment strategy. If a fund's investments are not consistent with that strategy, the trustee can:

  • dispose of that asset and where appropriate, reinvest those funds in a permitted investment; or
  • amend the SMSF's investment strategy to permit them to invest in that particular investment provided that it is in the best interests of the SMSF, and have the SMSF's members approve these arrangements.

You can read about how to vary your fund's investment strategy on our website.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of SMSF topics.

Order SMSF related document packages


Lawyer in Profile

Paul Ellis
Paul Ellis
Special Counsel
+61 3 9258 3524

Qualifications: LLB, Deakin University, BA (Political Science), Monash University

Paul is a Special Counsel in Maddocks Government and Not-for-Profit Commercial team. He specialises in:

  • the establishment, governance, operations, regulation and administration of charities and other not-for-profit entities,
  • in commercial arrangements for the procurement or supply of goods and services, including technology services, and
  • in compliance and enforcement activities undertaken by government agencies.

Paul is Maddocks' main authority in relation to the Personal Property Securities Act 2009.

He has an in-depth understanding of the government sector, as his experience prior to Maddocks includes 13 years with the Victorian Department of Justice.

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