Can I invest my SMSF in a mortgage fund?
Yes. Self-managed superannuation fund trustees can invest in wholesale mortgage funds, provided the fund’s investment strategy permits this asset class and the SMSF trustee qualifies as a wholesale investor under section 761G of the Corporations Act 2001 (Cth). Many SMSF trustees invest in property-backed mortgage funds as part of a diversified portfolio, seeking regular monthly income to support pension payments or to grow their retirement savings.
Why do SMSF trustees invest in mortgage funds?
Mortgage funds offer several features that may be attractive to SMSF trustees. These include regular monthly income distributions that can support pension phase cash flow requirements, property-backed security through registered mortgages over Australian real estate providing a tangible asset underpinning the investment, diversification away from traditional equities and listed property which are subject to daily market volatility, potential tax advantages as superannuation fund earnings are taxed at a concessional rate of 15 per cent in accumulation phase and may be tax-free in pension phase, and professional fund management by an experienced team removing the need for the trustee to originate and manage individual loans.
Granor Capital fund structures for SMSF investors
Granor Capital offers two fund structures that are suitable for SMSF investment. The Granor Lending Fund is a pooled mortgage fund that provides passive diversification across a portfolio of property-backed loans, targeting approximately 8 per cent per annum in monthly distributions. The Granor Lending Fund No. 2 is a contributory lending fund that allows investors to select individual loan opportunities and build their own portfolio of property-backed investments.
What SMSF trustees should consider before investing
Before investing SMSF capital in a mortgage fund, trustees should ensure their investment strategy explicitly permits investment in this asset class. Trustees should also consider the liquidity profile of the fund and whether it aligns with the fund’s cash flow requirements, concentration limits to ensure the SMSF is not overly exposed to a single asset class or fund, the requirement to seek independent financial and legal advice before making any investment decision, and ongoing compliance obligations under superannuation law including the sole purpose test.
What is the minimum SMSF investment in a Granor Capital fund?
The minimum investment in Granor Capital’s wholesale mortgage funds is $500,000, which also satisfies the wholesale investor product value test under the Corporations Act. SMSF trustees investing the minimum amount would need to ensure this is consistent with their fund’s diversification requirements and investment strategy.
Are mortgage fund distributions taxed inside super?
Income distributions received by an SMSF from a mortgage fund are generally taxed at the concessional superannuation rate of 15 per cent during the accumulation phase. In pension phase, the income may be tax-free, subject to the transfer balance cap and other superannuation rules. The specific tax treatment depends on the structure of the fund and the individual circumstances of the SMSF. Trustees should consult their tax adviser for advice specific to their situation.
Does my SMSF need to be a wholesale investor?
Yes. Granor Capital’s funds are available exclusively to wholesale investors as defined under the Corporations Act. An SMSF may qualify as a wholesale investor if the investment amount is at least $500,000 (the product value test), if the SMSF has net assets of at least $2.5 million certified by a qualified accountant, or if the SMSF trustee otherwise qualifies as a professional investor.
Can my SMSF invest in both Granor Capital funds?
Yes. An SMSF may invest in both the Granor Lending Fund and the Granor Lending Fund No. 2, subject to meeting the minimum investment requirements for each fund and ensuring that the combined investment is consistent with the SMSF’s investment strategy and diversification requirements.
Contact Granor Capital to discuss SMSF investment options.
Related: Investment overview | Wholesale mortgage funds | Private credit Australia | Wholesale investor eligibility
This page is for general information only and does not constitute financial, taxation, or superannuation advice. SMSF trustees should seek independent professional advice before making any investment decision.