SMSF Investment Strategy - Review & Update

A well-structured investment strategy is one of the most important foundations of a compliant and successful Self-Managed Super Fund (SMSF). Under the Superannuation Industry (Supervision) Act 1993 (SISA) and Superannuation Industry (Supervision) Regulations (SISR), SMSF trustees are required to formulate, implement and regularly review an investment strategy that is tailored to the circumstances of the fund and its members.

The purpose of an SMSF investment strategy is not simply to satisfy a compliance requirement. It is intended to help trustees make informed and disciplined investment decisions that align with the retirement objectives of fund members while balancing risk, return, liquidity and diversification. The Australian Taxation Office (ATO) expects trustees to actively consider these matters rather than relying on generic templates or broad asset allocation ranges.

A proper investment strategy should evolve with changing member circumstances, market conditions and retirement goals. Trustees must also ensure all investments comply with the sole purpose test, arm’s length requirements and other legislative obligations under the SIS Act.

3. Review & Update the Investment Strategy

An SMSF investment strategy must not remain static. Trustees are required to regularly review the strategy and update it when circumstances change.

The ATO expects SMSFs to have mechanisms in place for reviewing their investment strategy and to demonstrate that those review processes are followed consistently.

Regular Reviews

Best practice is for trustees to review the investment strategy at least annually. A review should assess whether the strategy remains appropriate for the fund’s objectives and member circumstances.

Trustees should consider whether:

• Investment objectives are still relevant
• Asset allocations remain suitable
• Risk levels are acceptable
• Liquidity remains adequate
• Insurance arrangements are appropriate
• Investments continue to comply with SIS requirements

Documenting the review process is essential. Trustee meeting minutes should record the review and any decisions made.

Trigger Events for Review

Certain events should trigger an immediate review of the investment strategy, including:

• Retirement of a member
• Commencement of pension payments
• Significant market volatility
• Death or incapacity of a member
• Large contributions or withdrawals
• Changes in member risk tolerance
• Acquisition or sale of major assets
• Entering into borrowing arrangements

For example, an SMSF transitioning from accumulation phase to retirement phase may need to increase liquidity to support pension payments.

Reviewing Diversification

Where the fund holds concentrated investments, trustees should regularly assess whether the level of concentration risk remains acceptable.

For example, if a single property or shareholding grows significantly in value relative to the rest of the portfolio, the strategy should consider whether rebalancing is appropriate.

Even where trustees intentionally maintain concentrated positions, the reasons should be clearly documented.

Reviewing Insurance

Trustees must also revisit insurance considerations regularly. Member circumstances change over time, and insurance requirements may increase, decrease or become unnecessary.

The review process should record:

• Whether insurance remains appropriate
• Changes in cover levels
• Premium affordability
• Member preferences

Legislative and Regulatory Changes

SMSF trustees must stay informed about changes to superannuation laws and ATO guidance. Regulatory changes may affect:

• Borrowing rules
• Contribution caps
• Pension requirements
• Insurance rules
• Taxation outcomes
• Compliance obligations

Failure to update the strategy in response to legislative changes may expose the fund to compliance breaches or tax consequences.

Importance of Professional Advice

Although trustees retain ultimate responsibility for the SMSF, obtaining professional advice can assist in ensuring the investment strategy remains compliant and effective.

SMSF accountants, financial advisers, auditors and legal professionals can help trustees assess:

• Investment suitability
• Risk management
• Tax implications
• Compliance obligations
• Estate planning considerations

Professional advice is particularly valuable where the fund invests in complex structures, related-party arrangements or leveraged investments. 

Conclusion

An SMSF investment strategy is far more than a compliance document. It is a critical framework that guides how trustees manage retirement savings, assess risks and make investment decisions.

A strong strategy should be carefully defined, properly implemented and regularly reviewed to ensure it remains aligned with member objectives and legislative requirements. Trustees must actively consider diversification, liquidity, risk, insurance and compliance obligations while ensuring all investments satisfy the sole purpose test and arm’s length rules.

The ATO expects SMSF trustees to adopt a genuine, tailored and well-documented approach to investment management. By maintaining a thoughtful and regularly updated investment strategy, trustees can improve retirement outcomes for members while reducing compliance risks and protecting the long-term integrity of the SMSF.