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Year-end investment strategy review wise

SMSF strategy review

The end of the financial year presents an opportune time for SMSF trustees to review their fund investment strategy and address problem areas.

The end of the financial year presents an opportune time for SMSF trustees to review their fund investment strategy and address any areas that may be lacking, a technical specialist has said.

To this end, SuperConcepts technical and private wealth executive manager Graeme Colley revealed the ATO has been highlighting certain components of existing investment strategies requiring immediate attention.

“The ATO has certainly raised some issues around people not addressing the risks associated with particular investments or lack of diversification, liquidity and so forth,” Colley said during a recent AMP Capital webinar.

“Now there is nothing wrong with having funds that are fairly conservative [with regard to risk] or [if] diversification is highly lacking and there’s a high concentration [of assets]. As long as you can address those issues and cover them and give reasons as to why that’s the case, then you’ll [have an acceptable investment strategy].”

During the webinar, he presented numerous questions that could simplify common issues that arise while trustees are looking at the fund’s investment strategy.

These include whether the SMSF has investments in or loans to related parties, whether it has assets under a limited recourse borrowing arrangement and whether the strategy agreed upon is tax effective.

Colley noted the end of the financial year is often a time when trustees focus on contributions to their SMSF and suggested certain ideas for them to consider in this regard.

“[You should ask] what type of contributions you want to put in [and] do you want to do that in cash,” he said.

“In a self-managed super fund you can actually transfer the value of the investment or transfer, say, your listed shares into your self-managed fund, and that may be treated as contributions.

“Do you want to claim a tax deduction or do you not want to claim a tax deduction?”

He pointed out trustees need to consider the timing of their contributions as well in the lead-up to 30 June.

“So they’re all important considerations,” he noted.

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