The Derivatives Lure Catching SMSFs

As official interest rates hover at an all-time low of 0.25%, SMSFs are being challenged to generate acceptable returns through defensive assets such as cash and term deposits.

SMSF trustees are now starting to look towards investing in high-risk assets such as derivatives because they think they can outperform the market and get a quick return.

Typically, very few SMSFs make a profit from these types of investments. And unless they’re professional stockbrokers, most of them post losses (sometimes significant ones) and take only short-term gains. 

With the ATO warning SMSF trustees not to use derivatives as a speculative tool, here’s what you need to know thanks to ASF audits.