Keeping a Margin Loan @ 50% LVR - How?

[ARF]

Hi all,

I have a question regarding margin lending and managed funds. How do you go about maintaining a certain LVR?

For example, if I start with a 50% LVR and the unit price is say $1, and moves up to $2, I now have a 25% LVR, I would've thought I could've added 25% of the portfolio value to my loan @ $2 / unit and that would bring it back to 50%?
I spoke to Commsec and they said if I want to add money to the fund using only my loan facility, I'd have to fill out a NEW margin loan and fund application, with all the stat dec's and all of that rigmorale to add in the 25% (or whatever it is). When I questioned him he said it was only for funds, as fund managers only take new funds with an application in writing? I can BPay as little as $100 from my bank account fine, I wouldn't have thought the fund would know where the money comes from (my bank or my loan facility)??
If he was right, that seems awfully limited (and downright stupid to me!) that it takes 25+ pages and two weeks to top up your LVR!!
Is this the case?

Thanks,
Adrian

 

[tobe]

It does seem odd. I just withdraw money to increase my LVR, or purchase more shares. The only problem being when I reach my lending limit, which means I have to do a new application etc.

 

[The Y-man]

It does seem odd. I just withdraw money to increase my LVR, or purchase more shares. The only problem being when I reach my lending limit, which means I have to do a new application etc.

Adrian is talking about buying UNLISTED managed funds through margin.

I am not surprised that forms might be required, as some funds require this even without a margin loan being involved to invest additional funds. This is to ensure the latest PDS has been read and understood.

Cheers,

The Y-man

 

[ARF]

Adrian is talking about buying UNLISTED managed funds through margin.

I am not surprised that forms might be required, as some funds require this even without a margin loan being involved to invest additional funds. This is to ensure the latest PDS has been read and understood.

Cheers,

The Y-man

Yeah that's correct, but I just don't understand why I can add my own money as I please, but I need to fill out application forms to add money from a loan facility. Commsec stressed that it's not them, it's the fund manager.
My fund doesn't require a new application and forms etc, as far as I can tell.

 

[The Y-man]

My fund doesn't require a new application and forms etc, as far as I can tell.

Check their PDS. Most would have a form in the back for "Withdrawal/Additional Investment"

Some fund managers like Colonial allow BPAY of additional investments however, it is done expressly on the understanding you have read their updated PDS.

Cheers,

The Y-man

 

[Sheryn]

Leverage isn't the issue it is the amount of the loan and request to increase loan

I'd have to fill out a NEW margin loan and fund application

If your margin loan was initially approved for say 100K and you wanted to increase to 125K you have to fill out the additonal paperwork to increase margin loan.


Just the same if you have a property loan for 100K and you wish to increase property loan to 125K.


Regards
Sheryn

 

[ARF]

If your margin loan was initially approved for say 100K and you wanted to increase to 125K you have to fill out the additonal paperwork to increase margin loan.


Just the same if you have a property loan for 100K and you wish to increase property loan to 125K.


Regards
Sheryn

I understand that, but I'm no-where near my credit limit at the moment, and increasing the leverage wouldn't change that. Reading through Vanguard's PDS I can't find anywhere where it states that paying by BPay is subject to reading the latest PDS. But apparently this is the way Commsec's margin loans operate so I guess I'll just have to deal with it.

Thanks for the help guys

 

[Go Fast]

I struggle to understand that you can't instruct your margin lender to send funds to the managed fund provider. I use ANZ, Leveraged Equities & St George as margin lenders and they're pretty happy to do anything with a signed instruction by fax. I use them solely for ASX listed shares though. I've faxed instructions for cash withdrawals to my bank account and other bank accounts, draw cheques for new issues, they won't b-pay but pretty much everything else.

I don't think it'll be much different for managed funds. If they won't let you do it through them just draw out cash to your bank account and send cash to the managed fund directly - it'll have the same effect.

Cheers

Matt

 

[The Y-man]

Reading through Vanguard's PDS I can't find anywhere where it states that paying by BPay is subject to reading the latest PDS.

Page 30 of the current Vanguard Investor Index Funds PDS under "Using Bpay"

"Additional Investments to a fund will be issued according to.... the current VIIF PDS and the constitution of the fund"

Cheers,

The Y-man

 

[ARF]

Page 30 of the current Vanguard Investor Index Funds PDS under "Using Bpay"

"Additional Investments to a fund will be issued according to.... the current VIIF PDS and the constitution of the fund"

Cheers,

The Y-man

Thanks Y-man