Essay on What Does A Smsf Invest?
As the trustees of the fund, you have the power to make investment decisions.
You have a great deal of freedom to select investments that you think will suit the needs of your fund and its members.
However, there are a number of rules that you must abide by.
Please read on to find out what restrictions may apply to your investments.
What are the restrictions?
Investments must be for the ‘sole purpose’ of providing retirement benefits for the members of the fund.
Members, relatives or associates of the trustees must not gain any immediate benefit from the fund’s assets or activities.
So, for example, any property owned by the fund cannot be used by the members or their families, even if rented out at a market rental.
What rules must trustees follow?
Trustees owe a fiduciary obligation to beneficiaries to act in their best interests and handle the trust in accordance with the trust deed. Additionally:
Trustees must act responsibly, honestly and in the best interests of all members. They must invest with care, skill and diligence.
Trustees must make investments at ‘arm’s length’ and on commercial terms. Any assets bought and sold must be at full market value. Income received from an investment must be the true market rate of return. Any interest paid on limited recourse borrowings must be at market rates for similar types of loans.
What assets do super funds actually invest in?
Fund investment portfolios can include many of the following…