The ATO guidelines provided to all SMSF trustees places an expectation on fund trustees that they will balance diversification with the process of maximising returns for the fund.
For funds over $1m, the capacity exists to build a portfolio of Limited Recourse Borrowing Arrangements (LRBAs). This means that a degree of diversification can be created, even though each loan arrangement is restricted to acquiring a single asset.
The maximum concessional contribution for each fund member is capped, and for some SMSFs, annual member contributions can seem to be a very slow mechanism to grow the value of the fund. The underlying performance of the fund starts to become the dominant driver of fund growth.
The use of borrowed funds, for SMSFs with the relevant trust deed powers, can be another mechanism where an SMSF trustee can impact the gross value of assets operating within their superannuation fund.
With NAB Super Lever, SMSF trustees can:
- Borrow to invest into their SMSF
- Choose from a broad range of listed securities and managed funds
While a margin loan can increase gains in a rising market, it can also magnify losses when the market declines. Find out more about the risks and benefits of a NAB Super Lever below.