Folkestone calls for calm on SMSF gearing 'hysteria'
While the number of SMSF trustees using leverage in their SMSFs has risen, it has not occurred at the alarming or widespread levels suggested by certain sections of the media, says Folkestone.
The fund manager said according to the ATO’s most recent report, at 30 June 2015 SMSFs held $13.5 billion in borrowings, representing 2.3 per cent of the total value of assets held within SMSFs.
“Despite elements of hysteria being contrived through sections of the media about gearing within SMSFs being a major contributor to the recent housing boom and the risks of using leverage in an SMSF; it remains a very minor component within SMSF’s,” said Folkestone.
“The proportion of SMSFs using gearing has grown from 2.3 per cent in 2010 to 6.7 per cent in June 2014 (the ATO is yet to release the numbers for 2015).”
Whilst there has been an increase in leverage used, Folkestone said it has not been at “widespread or alarming levels”.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.