Understanding Asset Classes
When a SMSF makes an equity investment it is effectively becoming a part owner in a company by taking an equity stake in the fortunes of that company. The proportion the SMSF holds in the company is its ‘share’, hence the expression of it being a ‘shareholder’.
Shares in companies do not have maturity dates as the company continues to operate as management changes over time and even as the nature of the underlying business of the company changes. That said, companies can be merged taken over or go out of business.
Direct and easy access to the Australian equity market has proved popular with SMSFs. The ability to buy and sell shares on-market provides liquidity for investors to manage a share portfolio. The price at which shares trade is determined by what sellers are will to sell for and buyers will to pay.
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