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
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.