If you run a Self-Managed Super Fund (SMSF), one of your key legal obligations is maintaining a current SMSF investment strategy. The Australian Taxation Office (ATO) requires every SMSF trustee to prepare, implement and regularly review this document. Without it, your fund is at risk of non-compliance, penalties, or disqualification.
This plain-English guide from the team at Verus Accountants walks you through everything you need to know, including what to include, real examples, and the consequences of getting it wrong.
What Is an SMSF Investment Strategy?
An SMSF investment strategy is a written plan that outlines how your fund’s assets will be invested to meet the retirement goals of its members. It is not just a formality. The strategy must genuinely reflect the fund’s circumstances and be tailored to your members’ individual needs.
The ATO takes non-compliance seriously. Trustees who fail to maintain a current, appropriate strategy may face administrative penalties of up to $18,800 per trustee (as of 2026).
What Must an SMSF Investment Strategy Include?
Under the Superannuation Industry (Supervision) Act 1993 (SIS Act), your investment strategy must address the following:
| Requirement | What It Means in Practice |
|---|---|
| Risk profile | Consider each member’s tolerance for risk and their proximity to retirement |
| Return objectives | Define target investment returns (e.g. CPI + 3% per year) |
| Liquidity | Ensure the fund can meet its liabilities, including pension payments and expenses |
| Diversification | Spread investments across asset classes to reduce concentration risk |
| Insurance | Consider life, total and permanent disability (TPD) insurance for each member |
SMSF Investment Strategy Example
Here is a simplified example of how a typical SMSF investment strategy might be structured for a fund with two members aged 50 and 48:
| Asset Class | Target Allocation | Rationale |
|---|---|---|
| Australian shares | 40% | Growth-oriented; long-term capital appreciation |
| International shares | 20% | Diversification; exposure to global markets |
| Property (direct) | 20% | Income-generating; inflation hedge |
| Fixed interest/bonds | 10% | Stability and capital preservation |
| Cash | 10% | Liquidity buffer for expenses and pensions |
This is a sample only. Your actual strategy must reflect your fund’s specific circumstances. A qualified SMSF accountant at Verus can help you document a strategy that is both compliant and genuinely aligned with your goals.
SMSF Property Investment Strategy: What You Need to Know
Property is a popular SMSF investment strategy choice for many Australians. However, strict rules apply. The property must:
- Be acquired at arm’s length (market value)
- Not be acquired from a related party (in most cases)
- Be used solely for business real property if leased to a related party
- Be held in the fund’s name, not personally
Important: Residential property cannot be lived in or rented by fund members or their relatives. Commercial property can be leased to related parties at market rent.
Choosing the right assets for your SMSF often goes hand in hand with broader business advisory planning — particularly for business owners who hold commercial property through their fund.
How Often Should You Review Your SMSF Investment Strategy?
The ATO requires trustees to review the strategy regularly and when a significant event occurs. This includes:
- A member joining or leaving the fund
- A member approaching or entering the pension phase
- Significant changes in market conditions
- Major changes to a member’s personal or financial circumstances
As a minimum, most advisors recommend a formal annual review, documented in trustee meeting minutes.
Understanding your SMSF obligations also connects closely to your overall taxation and accounting position. The two should always be reviewed together to avoid compliance gaps.
How Is an SMSF Investment Strategy Different from a Financial Plan?
Many trustees confuse an investment strategy with a full financial plan. Your SMSF investment strategy is a legal document that sits within your fund’s trust deed. A financial plan, by contrast, is broader advice provided by a licensed financial adviser and covers your total wealth picture.
At Verus, our SMSF accountants work closely with your financial adviser to ensure the two documents align and that your fund always remains ATO-compliant.
Common Mistakes to Avoid
- Using a generic template without tailoring it to your members’ circumstances
- Not considering each member’s insurance needs
- Failing to review the strategy after a major life event
- Holding all assets in a single class (poor diversification)
- Not keeping documented evidence of the review in trustee meeting minutes
External resources:
ATO: SMSF Investment Requirements
Frequently Asked Questions
Is an SMSF investment strategy a legal requirement?
Yes. Under the Superannuation Industry (Supervision) Act 1993, all SMSF trustees must have a written investment strategy. Failing to maintain one can result in ATO penalties.
Can I use a free SMSF investment strategy template?
You can use a template as a starting point, but it must be tailored to your fund’s specific circumstances and member profiles. A generic template that has not been customised is unlikely to satisfy ATO requirements.
How often does an SMSF investment strategy need to be reviewed?
The ATO requires regular reviews, particularly when significant events occur. An annual review is considered best practice and should be documented in trustee minutes.
Can an SMSF invest in property?
Yes. An SMSF can invest in both commercial and residential property. However, strict rules apply, particularly around transactions with related parties. Commercial property can generally be leased to a related party at market rent; residential property cannot.
Does an SMSF investment strategy need to address insurance?
Yes. Since July 2012, SMSF trustees have been required to consider the life insurance needs of each fund member as part of the investment strategy, and document their decision.
What is the difference between an investment strategy and a trust deed?
The trust deed is the governing legal document of the SMSF. The investment strategy is a separate document that sits within that framework and sets out how the fund’s assets will be invested. Both are required.
Can I manage my SMSF investment strategy without an accountant?
Technically yes, but it comes with significant compliance risk. An experienced SMSF accountant ensures your strategy meets ATO requirements, is reviewed at the right times, and is properly documented to protect you in an audit.
Need Help with Your SMSF Investment Strategy?
The team at Verus Accountants are chartered accountants specialising in SMSF setup and ongoing administration in Sydney. Book a free consultation today.
