Crafting a robust SMSF investment strategy in 2025

Managing a self‑managed super fund (SMSF) goes beyond choosing investments, it requires a carefully documented plan that guides every decision. Under Regulation 4.09 of the Superannuation Industry Supervision Regulations, trustees must have a written investment strategy that outlines how the fund will grow wealth, manage risk, and meet the retirement goals of its members. So, what does a sound SMSF investment strategy include, why is diversification and regular reviews are critical, and how accurate SMSF property valuations play a key role in keeping your strategy compliant and effective?

The strategy must reflect the specific circumstances of the fund, including:

• Risk tolerance of each member
• Investment objectives
• Diversification of investments
• Liquidity needs
• Insurance requirements for members

Trustees are expected to document how they plan to achieve these objectives, and critically, how asset values are assessed and aligned with fund goals.

What a Sound SMSF Investment Strategy Should Include

A robust investment strategy includes clear documentation of:

Diversification and Risk Management

Diversification is a central tenet of the ATO’s expectations for prudent fund management. Funds heavily weighted in one asset class, such as residential property or a single company’s shares, may be at risk of breaching best practice guidelines. Trustees must justify how concentration of risk is managed and supported with evidence, including independent property valuations.

The ATO has raised concerns in recent years about SMSFs with 90% or more of assets in one class, particularly when limited recourse borrowing arrangements (LRBAs) are involved. In such cases, trustees must be prepared to demonstrate why the strategy remains appropriate and how liquidity will be managed.

Regularly Reviewing the Investment Strategy

Trustees must regularly review their SMSF investment strategy:

• At least annually
• When fund membership changes
• When large assets are acquired or disposed of
• When pensions are commenced
• When economic or market conditions shift significantly

Each review should also include a reassessment of SMSF property valuations to ensure asset values reflect current market conditions. Failing to update the strategy or incorporate property valuation changes can result in non-compliance during an audit.

Liquidity and Insurance Considerations

Beyond asset allocation, SMSF strategies must address liquidity, particularly important when members enter pension phase. The fund must have sufficient cash flow to meet minimum pension payments and ongoing costs such as administration, insurance premiums, and property maintenance.

Insurance requirements must also be considered. Trustees are expected to assess whether insurance cover is appropriate for each member and include this assessment in the strategy.

How Valuations Strengthen Your Strategy

Accurate SMSF property valuations support better decision-making and reduce audit risk. They help ensure asset allocation is in line with the investment strategy and provide real-time insights for diversification and liquidity planning.

Herron Todd White delivers independent SMSF property valuations across all property types, ensuring strategies are backed by credible, market-aligned data. Whether your fund holds residential or commercial assets, our expert valuers provide the confidence trustees need to act with clarity.

A compliant SMSF investment strategy is more than a document, it’s a tool that evolves with the fund. With the right support and timely SMSF property valuations, trustees can build a strategy that meets their members’ needs today and well into retirement.