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Westpac self-funding instalments allow SMSF gearing
Westpac Institutional Bank has launched 31 self-funding instalments (SFIs) to provide moderately geared equity investment opportunities, one of the few ways self managed super funds (SMSFs) can make use of geared investments, Westpac stated.
The SFIs are ASX-listed and allow investors to purchase shares or exchange traded funds in two instalments.
Investors then have the option of paying off the loan and taking full ownership of the investment or letting Westpac sell the shares to pay off the remaining loan, Westpac stated.
Investors gain benefits of direct share ownership such as dividends and franking credits, and dividends from the shares are then used to help pay down interest, which is added to the second payment once a year, Westpac stated.
Westpac also plans to launch further structured investments over the next 12 months that will give investors access to international and Australian equities, and commodities with capital protection, according to Cathy Kovacs, head of structured equity investments at Westpac Institutional Bank.
Investor appetite for geared equity investment is building, with Australian Securities Exchange (ASX) education programmes revealing strong interest for SFIs, which are one of the few allowable forms of geared equity investment for SMSFs, according to Westpac.
SFIs give investors moderately geared exposure without the threat of margin calls, allowing the investor to maintain their position through each phase in the market, Kovacs said.
Westpac is offering SFIs on 31 S&P/ASX 50 stocks as well as major exchange-traded funds.
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