Do think about impacts of direct property on your fund's diversification

Superannuation law does not prohibit a fund from owning just one asset such as a valuable investment property.

Indeed, some fund trustees specifically decide to have SMSF portfolios dominated by a single property asset, perhaps after considering the diversification of their other super and non-super investments.

SMSFs are required to have written investment strategies.

And when preparing their strategies, trustees must consider such factors as investment risk, portfolio diversification, liquidity of investments, ability to pay member benefits and the members’ circumstances.

Despite the requirement that fund trustee smust consider diversification when preparing an investment strategy, they are not legally required to diversify.

Financial planners and superannuation specialists typically urge fund trustees to recognise the possible consequences if their retirement savings are overly dependent on the profitability of a single, high-cost asset.