Macquarie capitalises on gearing to the masses

The Macquarie Bank has grown its margin lending business by 90 per cent in the last twelve months on the back of growing interest in gearing into managed funds and shares amongst Australia’s well-healed up and coming investors.

The growth, which is believed to have taken Macquarie’s total margin lending funds under management to $600 million, comes amidst a backdrop of heightened competition in the margin lending arena, as a range of providers look to adjust their products in order to attract a new class of younger margin lending client.

Macquarie National Relationship Manager John Meagher says those in the 30 to 39 year age group now make up one third of the group’s margin lending clients, spread between those who gear into shares, managed funds and capital protected products.

According to Meagher, these thirtysomethings, often with a high disposable income but very few assets, have been attracted to Macquarie’s instalment gearing facility, which allows investors to borrow small amounts on a regular basis to invest into geared share or managed fund products.

And other margin lending providers appear to have similar ideas.

Last week, St George Margin Lending added a regular gearing facility to its margin lending offering, while the Commonwealth Bank and BT have also added regular gearing options to their margin lending range this year.

Meagher says Macquarie’s instalment gearing option, which allows investors to gear into shares or managed fund for as little as $1000 up front and then a further $250 per month, has been the cornerstone of the group’s growth over the last year.

He says young investors, particularly those in Sydney and Melbourne, are also choosing to regularly borrow to invest in shares or managed funds after becoming frustrated with what is seen as a largely overvalued property sector.

“Gearing into the share market is now seen as more accessible because you can come in at a lower level,” he says.