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
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.