Gearing strategies gaining popularity


There is growing investor confidence in getting back into gearing strategies, according to Leveraged.
Pointing to Investment Trend's 2015 Margin Lending Investor Report, 80 per cent of Leveraged customers were intending to maintain or build on their gearing strategy.
Leveraged head of distribution, direct, Darryl Drown, said there had been a shift in the type of customer who was gearing and how they were gearing their portfolios.
"We're seeing the rise of the unadvised of ‘direct' investor and we're seeing younger people with smaller facilities taking up the strategy while others are ‘buying the dips' or diversifying an existing portfolio using their margin loan," Drown said.
"With the current low interest rate environment and market volatility presenting opportunities to acquire blue-chip stocks at reasonable prices, borrowing to invest in shares and managed funds is a strategy that is likely to be one that more financial advisers revisit or at least consider as part of a client's overall financial plan."
Drown noted that diversification was a significant factor for some investors taking up margin loans.
"Many people will have significant exposure to ‘mum and dad' stocks in their super funds and come to the realisation that they also have the same shares acquired as a result of various demutualisations in their share portfolio as well," he said.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.