Stockbrokers are now the fastest growing margin lending channel, with their outstanding debt increasing by 7 per cent to $3.45 billion over the year to December 2015, says Investment Trends.
In its 2015 Margin Lending Broker Report, Investment Trends found that brokers are the fastest growing lending channel, constituting 28 per cent of outstanding margin debt, up from 22 per cent in 2011.
Outstanding margin debt in the broker channel also increased by 7 per cent over the year to December 2015, reaching $3.45 billion.
Conversely, margin debt held by financial planners grew 1 per cent to $3.47 billion, with the direct channel also growing 1 per cent to $5.18 billion.
“The financial planner and stockbroker channels have reached parity in terms of outstanding debt,” Investment Trends head of research, wealth management Recep Peker said.
According to Investment Trends, investors are now instigating margin loans to a greater extent.
The report indicated that 73 per cent of their clients instigated the margin loan in 2015, up from 52 per cent in 2014.
“Our research shows investors are becoming increasingly sophisticated in their approach to margin lending, including recognising the diversification and tax benefits, and seeing it as part of a broader portfolio strategy,” Mr Peker said.
“Stockbrokers could take advantage of this increased client understanding by incorporating gearing into their clients’ holistic strategy.”
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