Retail investor interest in protected margin loans has now surpassed $1 billion according to theReserve Bank of Australia.
According to Macquarie margin lending division director Phil Richards protected margin loans enable investors to benefit from share market growth without the risk of losing their capital.
“This sustained growth has shown that investors are continuing to protect their capital during a range of conditions,” Richards says.
Meanwhile St.George in the more traditional straight margin lending arena has surpassed $1 billion dollars, pushing its margin lending market share up to 9 per cent - with Macquarie andBTthe dominant players in the market.
“In the 12 months to September 2003, margin lending has grown in Australia at a rate of approximately 9.5 per cent. In the same period St.George has experienced growth in excess of 20 per cent,” the group’s head of margin lending, Andrew Black says.
“Brokers have traditionally been the first to employ margin lending when the market begins to pick up… What we are finding now is that financial planners are jumping on board and embracing gearing, as there market continues to strengthen.”