CBA targets SMSFs in equity product

The Commonwealth Bank has entered the ASX warrants market with the issue of instalment warrants aimed at SMSF investors, the bank has announced.

The first issue is aimed in particular at SMSF investors looking to implement gearing strategy over some Australian shares in the medium to longer term.

The instalment warrants are available over 28 companies listed on the ASX, and an exchange traded fund, according to the announcement. Gearing levels between 50 and 70 per cent are available to investors.

“The use of gearing is becoming increasingly popular,” said Moghseen Jadwat, head of equity product sales at the Commonwealth Bank.

“There are a number of reasons [to which this rise could be attributed], including clarity around the borrowing rules for SMSFs, recovery in equity markets, a reduction to contributions caps, trustees looking to accelerate capital growth and a falling interest rate environment.

“The take-up thus far has been pleasing, with interest from investors predominantly centered on Telstra, Suncorp and IAG” he added.

“Solid results from these companies, coupled with fully-franked dividends, make the leverage offered through instalment warrants appealing, particularly for SMSF investors looking for additional yield,” Mr Jadwat said.

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