20Investment strategy

20 Investment strategy

(1) The trustee of a *private ancillary fund must prepare and maintain a current investment strategy for the fund in accordance with this section.

Penalty: 10 penalty units.

(2) An investment strategy must set out the investment objectives of the fund and detail the investment methods the trustee will adopt to achieve those objectives. (3) An investment strategy must also reflect the purpose and circumstances of the fund and have particular regard to: (a) the risk involved in making, holding and realising, and the likely return from, the fund’s investments, having regard to the fund’s objects and its expected cash flow requirements (including distribution requirements); and (b) the composition of the fund’s investments as a whole, including the extent to which the investments are diverse or expose the fund to risks from inadequate diversification; and (c) the liquidity of the fund’s investments, having regard to its expected cash flow requirements (including distribution requirements); and (d) the ability of the fund to discharge its existing and prospective liabilities; and (e) the investment restrictions imposed by *Australian laws; and (f) the status of the fund as a *registered charity (if relevant); and (g) material conflicts of interest (whether actual or perceived) in holding particular investments (including conflicts affecting individuals involved in the decision‑making of the fund); and (h) the terms and other circumstances relating to any gift to the fund under a will. (4) The trustee must implement the investment strategy, and must ensure that all investment decisions are made in accordance with it.

Penalty: 15 penalty units.

(5) The investment strategy (and a record of the associated decision‑making processes) must be available in a written form so that the trustee, an auditor, a reviewer or the Commissioner can determine whether the fund has complied with this instrument and other *Australian laws.

Penalty: 10 penalty units.