Self Managed Fund Investment Strategies post 1 July 2007

QUESTION: My accountant says that my Self Managed Superannuation Fund risks being "non-compliant" if I don't have a current Investment Strategy. I can't see why I need a new Investment Strategy. I'm doing exactly what I did last year, so won't last year's Investment Strategy be sufficient?

ANSWER: Firstly, let's have a look at who is responsible for your Self Managed Super Funds (SMSF) investment strategy. Have a look at the Superannuation Industry (Supervision) Act 1993 (SIS Act). It states that you and your wife, as the Trustees of your fund are solely responsible. You are directly accountable for the management of your member's benefits. Therefore, you as Trustee, have a duty to carry out and document decisions about investing the assets of the fund. You need to carefully monitor your funds performance and what you want to invest in. As such, you must formulate and implement an Investment Strategy and review and update it on a regular basis. (You could update it daily if you wanted to.)

What is in a well constructed Investment Strategy? It has regard to the whole of the circumstances of your fund. This ensures due diligence on your part as Trustee. It also protects you from actions by the members (such as your ex-wife or your under 18 year old daughter in law) if you make a disastrous investment.

While you should review your Investment Strategy every year, it is particularly relevant this financial year with the new Government initiative "Plan to Simplify and Streamline Superannuation". A 2007-2008 Investment Strategy is now available at www.lawcentral.com.au and is fully compliant with the 1 July 2007 legislation.

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[tupax69]

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