DIY Super Fund must formulate and give effect to a written
investment strategy. Investment strategy can encompass investment in the
three major classes Cash, Shares and Property. DIY Super Fund may even invest in only one asset class or
one type of asset. Having determined the overall investment objectives, the trustees
should set an investment policy for the DIY Super Fund. The investment policy
should provide more detail on how the objectives are to be met. The main purpose in setting an investment strategy is to determine
the asset mix. This will involve setting an appropriate asset mix and strategic
range of assets. In developing the investment strategy, the following aspects
must be considered:
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Risk profile of members;
- Diversity of investments in one particular asset class and within that class;
- Liquidity to pay expenses, insurance, income and surcharge etc and
- Ability to discharge the fund's existing and prospective liabilities
Member's age, financial position, the types of investments the member currently holds, the financial experiences and current employment of the individual and the form in which the member would like to take their benefit, should also be considered.
The strategy must be formulated in line with the fund's objectives. Circumstances giving rise to a strategy review would be poor returns, change of members or where concerns arise as to the security of an investment.
It must be ensured that the investment strategy doesn't contradict the trust deed, as the deed may limit certain investments.
If an investment strategy has been formalised and the trustee sees an investment they would like the fund to make, the proposed investment must be considered in light of the investment strategy of the fund. If the investment does fall outside the scope of the strategy, then the strategy would have to be altered and the reason for the alteration documented.
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whenever a major investment is being proposed;
- whenever the members of the fund change;
- whenever poor returns are being generated from current investments;
- whenever there is a major change in the superannuation legislation; and every couple of years at least.