One of the few ways you can sort of 'borrow' money with a self-managed super fund (SMSF) is by buying Self Funded Instalment warrants (SFIs) either directly from the issuer or on-market. Rather simply put, you pay about half the share's value, plus a bit for the non-recourse loan and the call option and end up with an entitlement to the dividends or returns for twice as many shares as you would if you'd bought them outright on the stock market. A good mate of mine reckons they're a good way to go. The idea is that the dividends pay for the ongoing interest charges (or a large part thereof) and hopefully over the 5 or 10 year course of the exercise they will also increase in value significantly so you make a profit when you finally sell them. There are a few other taxation benefits as well so I thought I'd stick a financial toe in the water and test them out.
SFIs are issued by a few organisations - Macquarie, Westpac, ABN Amro etc. Since I'm a customer of the first I filled in the paperwork for some Wesfarmers and ConnectEast SFIs and posted it off at the end of March. I know they got it fairly quickly because they took the money out of my account on the 3rd April. This was about a week before ConnectEast went ex-div which was all part of the plan.
The financial wheels must turn very slowly because they took some more money out of my account on the 11th April after we had to adjust the deal since they could no longer issue any Wesfarmers SFIs due to a conflict of interest (ganging up to take over Coles) and the share price of ConnectEast had also gone up. I'm not sure quite what sort of statement you get with these things but I'd strongly suspect I didn't end up with the dividend from ConnectEast because it all went so painfully slowly. Whether that was intentional on the part of Macquarie or just a sign of gross inefficiency who knows ?
On the strength of all that, they're probably the last warrants I'll purchase from Macquarie. Westpac is looking good next time.