Whilst margin lending is not yet as popular as it was before the GFC (there are currently around 144,000 margin lending accounts in Australia, compared to the pre-GFC peak of 248,000 margin lending client accounts in December 2007) it is nevertheless still a reasonably popular wealth creation tool.
Each year Canstar researches and rates margin lending facilities available for investors in terms of both their direct share and managed fund offerings. Suncorp Bank is one of the 2016 winners, achieving a 5 star rating in both the Managed Fund investor profile, with an impressive mix of price and features on offer.
Canstar caught up with Adrian Buckley – Head of Product & Pricing, for a Q&A on outlook the development of margin lending products.
Q: Suncorp Bank has a very impressive acceptable securities list. What is the process for determining whether a stock/fund is placed on the list?
A: Our team partners with experienced product specialists who closely monitor the market and follow a comprehensive process for determining which stocks/funds should be placed on the list, and at what LVR. We use decision and risk assessment models to assess stock/funds against a number of measurement indicators including past performance, capitalisation, volatility, past and expected industry performance and global trends. We combine the model results with our analysts’ extensive experience and add to the list the stock/funds that meet our performance and risk criteria.
Q: What are some questions that would-be investors should ask themselves before making the decision to take out a margin loan?
A: Margin loans can deliver many benefits to customers who have a strong understanding of the product and the types of risks it brings. Before taking a margin loan customers should do thorough research or talk to their financial adviser to understand the opportunities and risks associated with this type of loan.
A: Over the next 12 month, the Bank will remained focused on sustainable growth in its margin lending portfolio. We are continuing to see new customers cautiously investing in margin lending, and exploring new ways to gear their portfolios.
Q: What fascinates you personally about margin lending?
A: I’m fascinated by all the work that happens behind the scenes to make it simple for our customers. Our non-Margin lending customers believe that margin loans are really complex, however when they step into it they see how simple we make it for them.
According to Canstar’s analysis, Suncorp Bank’s Share Finance Loan performs very respectably in price and particularly well with regards to features.
Achieving a 5 star rating in the managed fund investor profile, Suncorp Bank is the market leader in terms of the number of managed funds that can be used as security, with a whopping 1,885 managed funds on its approved securities list.