Does the investment fit in with the funds investment strategy?
All superannuation funds must have a written investment strategy and any investments made by the fund must fit with the strategy. The trustee of a superannuation fund must formulate and implement an investment strategy having regard to: • the risk and return of investments; • diversification; • liquidity; and • the ability of the fund to meet its liabilities. Whilst the strategy does not have to name specific types of investments, it must be broad enough to allow the type of investment proposed. When making an investment, the trustees must determine whether the fund’s investment strategy allows investment in the type of asset under consideration. In addition to being consistent with a fund’s investment strategy, the trustees must also ask themselves if the asset is a prudent investment for a superannuation fund.
