While the number of Australians using margin loans decreased by 4% in 2015 based on RBA figures, the total margin debt increased by 4%.
In dollar terms, the average margin loan increased by 8% in 2015 to $180,000. What this indicates is the remaining margin debtors in the sector are increasing the amount they're borrowing, which reflects Investment Trends' modelling in its 2015 Margin Lending Investor Report. The report says investors are seeing the "undervalued" Australian share market as a gearing opportunity.
Based on a survey of 2038 Australian investors (and ongoing modelling based on prior research), the new report shows that 56% of current margin debtors agree Australian shares are undervalued, and only 13% believe volatility is a preventative factor in increasing margin debt.
Furthermore Australians appear to be increasingly satisfied with their margin lenders, giving high ratings across Investment Trends' "key satisfaction drivers". The report added that this "has translated into satisfaction with margin lenders returning to pre-GFC levels." In this regard, Leveraged, CommSec and BT Margin Lending were the most popular options.
The report also estimated that there are a further 96,000 investors who intend to take on margin loans over the next 12 months.
"Margin lending investors as a group tend to be the most optimistic in their share market outlook, and recent share market falls are seen as investment opportunities for many," said Investment Trends head of research for wealth management Recep Peker.
He added, "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."
We invite you to watch our latest video featuring Bell Direct chief executive officer Arnie Selvarajah.
In the video and accompanying article he explains how easily the increasing number of advisers using ... Watch video
We invite you to watch our latest video featuring Zurich Investments senior investment strategist Patrick Noble.
The question of how to generate a satisfactory return to meet investors' needs is becoming ... Watch video
It is often said by equity managers with a mandate to scour the entire globe for investment ideas that getting the geographic allocation right in any given year is the most important driver of returns.
That's ... Watch video
We invite you to watch our latest video featuring the head of ANZ ETFS, Kris Walesby.
In it he introduces a new ETF, due for launch later in July, which tracks the Euro Stoxx 50 index of major companies ... Watch video
Financial Standard editor Mark Smith presents a roundup of the week's biggest industry news and executive appointments. In this week's news:
QIC and Future Fund back $3bn renewable fund
A strategic partnership ... Watch video
Get it Daily
FREE to your inbox, get the Financial Standard Daily Email.