Westpac self-funding instalments target SMSFs

Westpac Institutional Bank has launched 31 self-funding instalments (SFIs) to provide moderately geared equity investment opportunities, particularly to self-managed super funds (SMSFs).

SFIs are ASX-listed and allow investors to purchase shares or ETFs in two instalments, and investors have the option of paying off the loan and taking full ownership or letting Westpac sell the shares to pay off the remaining loan, 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 programs 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.

They provide benefits of direct share ownership, including dividends and franking credits, and share dividends are then used to help pay down interest, which is added to the second payment, or loan component, once a year.

Westpac is offering SFIs on 31 S&P/ASX 50 stocks as well as major exchange-traded funds.