# SMSF: Investment strategy



## yonnie (17 February 2008)

I`ve been thinking about the investment strategy for my super fund.

Are there any examples of an investment strategy on the internet somewhere free of charge?

the ATO wants it to be a LONG TERM investment strategy accross a number of asset classes like shares, property and fixed deposits.

Now my fund is not large enough to include property and besides I dont want the hassle of owning property directly.
Also I dont like to invest in property shares, just for the sake of diversification.

Fixed deposits dont pay enough to my liking.
Besides I have enough cash in between trades to pay any outgoings.

Shares: I dont want shares for the long term in these uncertain times.

What I`m doing now is: trading in a wide variety of shares
(around 40 candidates) short term with a rigorous stop and generating about 1000 trades a year with returns of 20%+ per year.

Would the ATO be happy with this way of investing?


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## Wysiwyg (17 February 2008)

yonnie matey, there is a thread started on this subject already.Go to search -> advanced search -> keywords (smsf) -> under the keywords box is a drop down in which you choose titles only.Have a look there mate.


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## yonnie (17 February 2008)

Wysiwyg said:


> yonnie matey, there is a thread started on this subject already.Go to search -> advanced search -> keywords (smsf) -> under the keywords box is a drop down in which you choose titles only.Have a look there mate.




thanks wysiwyg,

took part in a few of those threads myself, but my questions haven`t been aired yet.

so is everybody diversifying long term in shares, propery and fixed deposits?

where can I find an example of an investment strategy?


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## Julia (17 February 2008)

yonnie said:


> thanks wysiwyg,
> 
> took part in a few of those threads myself, but my questions haven`t been aired yet.
> 
> ...




yonnie, the investment strategy only needs to be a very simple statement.

My original Strategy Statement was as follows:

1.  Fund Purpose
The purpose of the Fund is to provide retirement benefits to members.

2.  Investment Objectives
Over a longer period of time the primary investment objective of the Fund will be to maximise the return available in investment markets, having regard for the needs of the members and for an appropriate level of diversification of assets as specified by the Trustees from time to time, specifically to secure after tax returns over five years that exceed inflation by at least X%.
(put whatever % you think appropriate).

3.  Investment Policy
The Fund will seek to maximise risk adjusted returns over the longer term by following a balanced approach to investments.

At the present time, the Trustees believe that the Fund is likely to secure higher long term returns by having a significant exposure to Australian shares chosen for their capacity to provide capital growth, together with regular income from dividends and tax offsets from franking credits.  A proportion of the fund will be in cash.  This proportion will vary from time to time depending on stockmarket conditions.

4.  Monitoring Investment Performance
The Trustees will review investment performance at least annually after financial statements have been prepared.

---------------------------------------------------------

That's vague enough to allow you to have reasonable discretion as to what assets you hold at any particular time.  

If, however,you do something different, e.g. pull out a lump sum, then your file needs to have a 'sub-statement' to that effect.

Hope this helps.


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## Duckman#72 (18 February 2008)

Julia said:


> yonnie, the investment strategy only needs to be a very simple statement.
> 
> 2.  Investment Objectives
> Over a longer period of time the primary investment objective of the Fund will be to maximise the return available in investment markets, having regard for the needs of the members and for an appropriate level of diversification of assets as specified by the Trustees from time to time, specifically to secure after tax returns over five years that exceed inflation by at least X%.
> ...





Hi Guys

To be even safer it is a good idea to put in a "range" for each investment class that you want your self managed fund to comply with.

For example:

"The investments for our superannution fund will fall between the following ranges:
Cash 0%-90%
Australian Shares 25%-60%
International Shares 0%-40%
Property 0%-40%"

Obviously you can make this this fairly broad, but by specifically listing the bands it is an easy way to prove to the ATO (if you are ever asked) that your fund is adhering to the investment strategy. The investment strategy is one area the ATO is looking to tighten up on and they like to link it to something "tangible" like percentiles. 

As Julia says - if you are going to do something unusual - make sure you update your investment strategy and prepare the accompanying minutes.

A word of warning - don't try and be smart and say for every asset class - "0%-100%". No one likes a smart *** and the ATO are no exception!!!  

Duckman


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## yonnie (18 February 2008)

thank you Julia and Duckman,

I really appreciate the time you 2 put into your replies and its helping me a lot.

thank you again


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## bongcso (11 September 2009)

If any new SMSF Trustees are looking for help in preparing an investment strategy for SMSFs, I have written a series of articles on how to prepare and investment strategy and have posted the one we use for our SMSF on our blog together with a sample of minutes of an annual review of the investment strategy. Here are the links:
How to prepare an investment strategy for your SMSF
Sample SMSF Strategy and Annual Review Minutes

Our investment strategy also includes use of options for hedging and generating additional income.


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## naughtynickers (27 December 2009)

bongcso said:


> If any new SMSF Trustees are looking for help in preparing an investment strategy for SMSFs, I have written a series of articles on how to prepare and investment strategy and have posted the one we use for our SMSF on our blog together with a sample of minutes of an annual review of the investment strategy. Here are the links:
> How to prepare an investment strategy for your SMSF
> Sample SMSF Strategy and Annual Review Minutes
> 
> Our investment strategy also includes use of options for hedging and generating additional income.




Thanks for that there is some really good stuff on your site! keep up the great work.


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## bongcso (27 December 2009)

Thank you. It is always nice to get feedback from visitors. Do let me know if there are any other topics/features you would like to see on the site. 

Christina


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