Superannuation contributions limitations give way to gearing
Limitations around superannuation contributions have given way to gearing in SMSFs, according to the Commonwealth Bank.
Gearing now plays a greater role in the wealth creation process for trustees, according to Moghseen Jadwat, the Commonwealth Bank's head of business development for structured investments.
Jadwat said the rapidly increasing growth of the SMSF market was driving demand for protected lending.
"Employing a conservative gearing strategy under a protected loan can result in an SMSF gaining double the exposure of their super contribution," Jadwat said.
"Generally, an SMSF will get a net tax benefit from a protected loan…this is in addition to the enhanced exposure and potential returns," he added.
The bank said the growth of SMSFs could continue to the point where SMSFs may represent a bigger sector than industry super funds or retail super.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Australia’s superannuation funds are becoming a defining force in shaping the nation’s capital markets, with the corporate watchdog warning that trustees now hold systemic importance on par with banks.
Payday super has passed Parliament, marking a major shift to combat unpaid entitlements and strengthen retirement outcomes for millions of workers.
The central bank has announced the official cash rate decision for its November monetary policy meeting.
Australia’s maturing superannuation system delivers higher balances, fewer duplicate accounts and growing female asset share, but gaps and adequacy challenges remain.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
225.31 3 y p.a(%)
2
Loftus Peak Global Disruption Fund Hedged
120.73 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
72.47 3 y p.a(%)
4
Paradice Australian Mid Cap A
69.09 3 y p.a(%)
5
Global X Ultra Long Nasdaq 100 Complex ETF
61.94 3 y p.a(%)
