Geared investors see bright side to volatility
Margin lending investors are the most optimistic in their share market outlook, with both current and potential margin lending investors regarding recent share market falls as a gearing opportunity, Investment Trends research reveals.
The 2015 Margin Lending Investor Report indicated that more than half (56 per cent) of margin lending users said Australian shares were undervalued after recent falls in the market, up from 31 per cent in 2014, while only 13 per cent said market volatility was preventing them from using margin lending.
Investment Trends' head of research for wealth management, Recep Peker, said: "For advisers involved with margin lending, it is important to note that how investors use margin lending is evolving — they are becoming more technical in their approach to margin lending".
"More are recognising the tax benefits of margin lending, seeing it as a part of their broader portfolio strategy, and understanding they can use it for assets other than just direct shares."
Although margin lending user numbers had dropped by 3000 from 2014 to 67,000 active margin lending investors as at September 2015, total outstanding margin debt increased by four per cent to $12.3 billion over the year to September.
This was due to those having margin loans borrowing more, with the average loan size per margin lending client reaching $180,000, up eight per cent from September 2014.
Peker attributed the growth to the direct channel, but said the intermediary/advised channel had not shown growth.
Meanwhile, research also showed 96,000 investors who were not currently using margin lending intended to do so in the next 12 months, with Peker noting that while they found the diversification benefits appealing, they were more worried about market volatility than current margin lending investors.
"This presents an opportunity for both financial planners and stockbrokers, as many of these investors are seeking education and guidance before entering the market," he said.
Clients were most satisfied with Leveraged as a margin lender, followed closely by CommSec and BT Margin Lending.
AUTHOR
Malavika Santhebennur
Recommended for you
Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million.
Metrics Credit Partners is expanding its private credit fund range with a managed fund for retail investors following investor demand.
Investment executives say the benefits of real assets for client portfolios can “absolutely” outweigh the illiquidity risk, provided there is a good understanding of its risks and returns and of client goals.
Fund manager GSFM has appointed a key account manager for Queensland, following the appointment of a head of retail distribution last month.
