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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

Kate Latta
Kate Latta
Associate
PH: 61 3 9258 3012

Kate is a lawyer in Maddocks General Commercial Team. Kate joined the firm in 2010 as a paralegal and was admitted to practice in December 2012.

Kate has been involved in acting for a range of commercial, government and professional industry clients.

Her areas of expertise include:

  • drafting and reviewing commercial contracts;
  • corporate law;
  • corporate governance;
  • mergers and acquisitions; and
  • trusts law;