Securities Based Lending

There are two kinds of gearing: internal and external.

Gearing (or Leverage) can be provided to increase the profits of your current investment portfolio. Internal gearing is common in certain types of investments such as hedge funds. Fund manager determines the level of leverage and that often changes during the term of investment based on market conditions. Details of the leverage are always presented in the fund’s prospectus. Usually, the level of leverage will vary from 25% to 50% of the equity investment. All expenses of the internal gearing is already included in the fee for the fund manager, making it very cost-effective and simple.

Increase Profits with a Portfolio Loan Account.

Securities based lending in a more traditional sense is most often provided as a Portfolio Loan by a third party bank to an individual investor. A Portfolio Loan provides a single source of increased borrowing power based on the value of eligible securities in your portfolio. Securities based lending via a Portfolio Loan is often a convenient alternative to other costly and restrictive financing schemes. These loans can be particularly advantageous when the credit is accessible in currencies with low interest rates, while the investment is made in currencies with higher interest rates. Most banks provide lending in various currencies of your choosing.

External gearing involves a loan from a third party investor.

To qualify, the investor must for the whole term of the loan assign investment assets to a financial institution (bank) that provides a loan. In general, external gearing requires more monies than internal gearing, typically US $500,000, whereas the credit level of the external gearing can also be greater – up to 300%. The main investment assets should generally be ‘wrapped’ in a life insurance policy or placed in a trust, and in most cases must be guaranteed by a third party bank.

We identify and advise on the best ways to increase your investments.

We can identify and provide advice on various funds that offer internal gearing. For individual investors seeking a more personalized approach, we select financial institutions (banks), ready to extend external gearing through a Portfolio Loan Account.. These services provide our clients opportunities unavailable to them in local banks and help them quickly reach their financial goals. The following table demonstrates the types of securities based lending accounts currently available.