Everything SMSF trustees need to know about rebalancing

Self-managed super fund (SMSF) trustees are required to keep their fund’s investment strategy current and ensure the fund’s investments remain appropriate for the fund members. That means regularly checking whether the fund’s investment portfolio still sits within the asset-allocation ranges set out in the fund’s investment strategy, and rebalancing when market movements, cash flows or member circumstances push the fund away from those ranges.

Rebalancing simply means buying or selling fund assets so that the fund’s overall investments move back toward the ranges set out in the SMSF investment strategy.

Ideally, an investment strategy should include asset allocations split across a diversified portfolio of growth and defensive-style investments, which might look something like this:

• Equities 0–70%
  • Australian 0–60%
  • Global 0–25%
• Property 0–10%
  • Listed property trusts 0–10%
  • Unlisted property trusts 0–10%
• Cash 0–20%
• Alternatives 0–5%

(Note: The above asset allocation is for illustrative purposes only. The SMSF asset allocation that is appropriate and relevant for an SMSF needs to be determined based on the personal circumstances of the fund members.)