A number of multi-member superannuation funds are looking at gearing strategies as part of their investment horizon, according to Argyle Partnership senior partner Peter Bobbin.
Gearing is now practised by self managed superannuation funds (SMSFs) following legislative changes made in September 2007. These changes allowed funds to borrow if they satisfied the requirement under sub-section 67(4A) of the Superannuation Industry (Supervision) Act (SISA).
Bobbin said that large funds are looking at either adopting gearing themselves or offering the strategy to their members.
Under Australian Prudential Regulatory (APRA) requirements, multi-member superannuation funds are able to provide their members with investment choice strategy, Bobbin said.
Recently the industry funds sector has moved to offer special services that target their wealthy members.
In January, superannuation business Industry Fund Financial Planning (IFFP) launched a financial advice service in order to retain the growing number of wealthy superannuation fund members.
Allowing their wealth members to use gearing in superannuation could be one way of targeting this group.
Bobbin said that it will take a longer time for multi-member funds to implement such a strategy.
"It's simpler for SMSFs to move faster in this area. The multi- member funds have APRA requirements and are much larger," he said.
