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Fund manager downplays SMSF 'hysteria'

Folkstone has called for calm regarding SMSF leverage, claiming that while usage rates have risen, it has not occurred at the alarming or widespread levels suggested by certain sections of the media.

SMSF Miranda Brownlee 27 January 2016 — 1 minute read

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 SMSFs,” 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”.