SMSF · investment strategy · s52(2)(f) template
SMSF investment strategy template — the six factors s52(2)(f) requires.
Every SMSF must hold a written investment strategy that addresses the six factors set out in section 52(2)(f) of the Superannuation Industry (Supervision) Act 1993. The auditor checks the strategy annually for existence, adequacy and currency. This page is the clause-by-clause explainer of what a compliant strategy needs to cover, plus a free template (Word + PDF) you can take to your SMSF adviser as a starting point.
What this template is — and isn't
Is: a compliant scaffolding document that addresses each of the six s52(2)(f) factors with the structural clauses an SMSF auditor expects to see. A starting point for trustees who don't have a current strategy, or for accountants preparing a strategy for a new fund or a property- acquisition update.
Isn't: personalised financial advice. The template does not recommend a specific asset allocation or strategy for any particular fund. Trustees must adopt a strategy reflecting their fund's actual circumstances, and the strategy should be reviewed by a registered SMSF adviser or specialist SMSF accountant before adoption.
The six factors — clause-by-clause
Section 52(2)(f) requires trustees to formulate, regularly review, and give effect to an investment strategy that has regard to six factors. The template addresses each as a separate clause. Below is the structure and what each clause needs to contain to satisfy the auditor.
Clause 1 / s52(2)(f)(i)
Risk involved in making, holding and realising investments
"The risk involved in making, holding and realising, and the likely return from, the entity's investments having regard to its objectives and its expected cash flow requirements."
The clause documents the trustees' assessment of investment risk across the asset classes the fund holds or proposes to hold. Risks typically addressed: market risk (asset values fall), credit risk (counterparty default), liquidity risk (asset can't be sold quickly at fair value), concentration risk (single asset is a large share of the fund), specific risk (asset-class-specific factors — vacancy for property, interest-rate risk for bonds). Where the fund holds a single residential property under LRBA, the concentration, liquidity and market risks need explicit discussion.
Clause 2 / s52(2)(f)(ii)
Likely return and the fund's investment objectives
"The likely return from the entity's investments having regard to its objectives and its expected cash flow requirements."
The clause states the fund's return objective and the trustees' reasoning about likely returns from the chosen asset mix. Typical formulations: a real return target above CPI (e.g. CPI + 3%), a benchmark-relative target (e.g. within 1% of the ASX 200 over rolling five-year periods), an absolute return target (e.g. 6% nominal). The clause also documents the trustees' view on the likely return from the specific assets held — property yield, expected capital appreciation, dividend yield, term-deposit returns — and how those align with the stated objective.
Clause 3 / s52(2)(f)(iii)
Composition of investments and diversification
"The composition of the entity's investments as a whole, including the extent to which they are diverse or involve the entity being exposed to risks from inadequate diversification."
The single most-audit-sensitive clause for funds holding property. The trustees must address the diversification of the fund's portfolio across asset classes and explain explicitly when the portfolio is concentrated. Where the fund holds 70%+ in a single property (typical for an LRBA fund), the clause must document why concentration is appropriate: usually some combination of expected contributions diversifying the portfolio over time, the property generating reliable rental income, or the trustees' acceptance of concentration risk in pursuit of the return objective. The ATO has explicitly flagged single-asset strategies as audit-attention items — generic boilerplate that doesn't address concentration is the most common audit qualification reason.
Clause 4 / s52(2)(f)(iv)
Liquidity of investments and expected cashflow
"The liquidity of the entity's investments having regard to its expected cash flow requirements."
The clause documents the fund's expected cashflow needs and the liquidity of the assets available to meet them. Cashflow needs typically include: pension payments (where members are in retirement phase), minimum pension requirements (4% of account balance from age 60-64 scaling up with age), fund administration costs (audit, ASIC annual fee, accountant), LRBA loan repayments (if the property is under LRBA), insurance premiums for member insurance. The liquidity assessment matches asset composition against expected need — property is not liquid; cash and term deposits are. A liquid asset buffer of $50,000–$150,000 is typical for property-heavy funds.
Clause 5 / s52(2)(f)(v)
Ability to discharge existing and prospective liabilities
"The ability of the entity to discharge its existing and prospective liabilities."
The clause addresses whether the fund's assets and cashflow are sufficient to meet all current and reasonably- anticipated future liabilities. For an LRBA fund, the existing liabilities include the loan itself (and the ongoing repayments); for a pension-phase fund, prospective liabilities include the pension obligation as members move through retirement. Where the fund's only liquid assets are below the next 12 months of pension and loan repayments, the strategy must address the source of future liquidity — contributions, asset sales, or explicit recourse to refinance.
Clause 6 / s52(2)(f)(vi)
Whether to hold insurance cover for members
"Whether the trustees of the entity should hold a contract of insurance that provides insurance cover for one or more members of the entity."
Added by the Stronger Super reforms of 2012, this clause requires the trustees to consider — and document the consideration of — whether the fund should hold life, TPD or income protection insurance on members. The clause does not require the trustees to take out insurance; it requires them to think about it and record the consideration. A common compliant approach: trustees have considered insurance, members already hold separate cover externally (or in another super fund), trustees do not propose to take out additional insurance through the SMSF at this time, decision to be reviewed annually. The documented consideration satisfies the requirement.
The SMSF investment strategy template is general-information scaffolding addressing the structural requirements of s52(2)(f). It is NOT personalised financial advice and does not recommend any specific investment, allocation or strategy for any particular fund. Trustees must adopt a strategy that reflects their fund's actual circumstances. The strategy should be reviewed by a registered SMSF adviser, financial planner or specialist SMSF accountant before adoption. Esteb & Co is a licensed mortgage broker, not an SMSF adviser.
How to use this template
- Receive the Word + PDF. Delivered to your inbox in both formats. Word for editing; PDF for reference.
- Fill in the fund-specific details. Fund name, member list, return objective, asset composition, expected cashflow, insurance position. The template has placeholders for each.
- Address each of the six factors. Don't leave any clause as boilerplate — the ATO and the auditor look for specificity. Concentration discussion (Clause 3) and liquidity discussion (Clause 4) are the audit-sensitive ones.
- Review with your SMSF adviser or specialist accountant. The strategy must reflect the actual fund — the template is the structure, your adviser confirms the substance.
- Adopt by signed and dated minutes. The trustees adopt the strategy by resolution. Date matters: must be in force at the time the audited financial year applies.
- Review at least annually. Update for any material change — property acquisition, new member, pension-phase commencement, large contribution, market movement.