I recently raised the issue of the inclusion of investment ranges within asset classes which was missing from an investment strategy. Areas of risk, diversity, liquidity, discharge and insurance where included however the investment strategy doesn't appear to have been updated for many years.

I received the following response from the accountant and would like some advice on how other members mitigate this situation and deal with this pushback.

First of all, we are not financial advisors.

We provide trustee’s with an Investment Strategy template that may be adopted by their funds.

Most choose to adopt with minor amendments. Some create their own or consult financial advisors.

We have reviewed the requirements of SIS Regulations 4.09 & compared it with the majority of Investment Strategies adopted by our clients.

We have made comments in red below to how it applies:

2)  The trustee of the entity must formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:

1. the risk involved in making, holding and realising, and the likely return from, the entity's investments, having regard to its objectives and expected cash flow requirements;

Considered in “Risk” paragraph.

(b)  the composition of the entity's investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;

Considered in “Diversity” paragraph.

All major investments are listed and it states whether the trustee has reviewed and is satisfied with the asset mix

(c)  the liquidity of the entity's investments, having regard to its expected cash flow requirements;

Considered in “Liquidity” paragraph.

(d)  the ability of the entity to discharge its existing and prospective liabilities;

        Considered in “Discharge of Liabilities” paragraph.

(e)  whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.

Considered in “Insurance” paragraph.

Also, we have reviewed ATO’s guidance regarding what investment strategies must consider:

https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/investing/your-investment-strategy

Although the ATO suggests that a fund can includes investment ranges for fund’s assets, it specifically states, if you choose not to use allocated portions or percentages in your strategy, you must list material assets.

Further, we have had a couple of our larger funds reviewed by the ATO, including reviewing the fund’s Investment Strategy, and they did not raise any issues.