What is Portfolio LVR?

How does Portfolio LVR work?

Benefits of Portfilio LVR

Risks of Portfolio LVR

 What is Portfolio LVR?

Portfolio LVR is a feature of the CommSec Margin Loan. It rewards investors who hold a diversified portfolio by granting increased Loan to Value Ratios (LVRs) and access to LVRs on stocks that normally don’t receive a LVR in a non-diversified portfolio. We call these – bonus stocks.

Portfolio LVR may increase the LVR of a security in a diversified portfolio. This increased lending value, can provide investors a larger cover against margin calls or be utilised by investors to further grow their portfolio.

In addition to having access to Portfolio LVRs, investors holding a well diversified portfolio will be better protected if one or more of the investments don’t perform as expected. We are able to offer increased lending values in diversified portfolios because our experience in margin lending has shown us that a diversified portfolio is less likely to trigger a margin call than a non-diversified portfolio. Therefore we offer a reduced LVR on single stock and non-diversified holdings.

More on Portfolio LVR. Visit our FAQs

How does Portfolio LVR work?

The diversity of your portfolio will determine if Portfolio LVR is applied on the Approved Equities in your portfolio. If you hold a diversified portfolio of five or more Approved Securities then Portfolio LVR is applied to the Approved Equities in your portfolio.

Note: Approved managed funds and other approved non-equity securities will count towards the number of securities in your portfolio, however only the Approved Equities will receive Portfolio LVRs.
 
 

Portfolio LVR is applied to Approved Equities in a diversified portfolio:

• Approved Equities: are equities in our approved list which is available on the CommSec website.
• Approved Securities: are any securities (including equities, managed funds and cash) which are taken into account when calculating your portfolio’s lending value.

Equities in our Approved Equities list will have one of three LVRs as outlined in the below table:

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Example of Approved Equities list:

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Benefits of Portfolio LVR

Increases your cover against a margin call

By increasing the difference between your margin loan’s current Loan to Value Ratio (LVR) and your Margin Call LVR, Portfolio LVR can help provide you with increased cover before a margin call is triggered.

Additional LVRs on currently Approved Equities

Portfolio LVR offers a diversified portfolio higher LVRs on Approved Equities. For example, if an Approved Equity receives a standard LVR of 50%, with Portfolio LVR on a diversified portfolio that Approved Equity will receive a 55% LVR.

Access to bonus stocks

Bonus stocks are equities which are also on our approved list and have a 0% standard LVR, however, as a benefit of Portfolio LVR, on a diversified portfolio they receive a 40% LVR.

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Download the Portfolio LVR brochure

Risks of Portfolio LVR

A Margin Loan uses borrowing to increase your investment exposure, which may have the effect of multiplying any losses, as well as gains, in a portfolio.

If your portfolio qualifies for Portfolio LVR, trades you place may significantly affect your gearing ratios. For example, if you sell an approved security and as a result there are fewer than 5 Approved Securities in your portfolio, your portfolio will no longer qualify to receive Portfolio LVR and you will lose Portfolio LVR on all Approved Equities.

The LVR will revert to standard or single stock LVRs, which could potentially trigger a margin call.

We strongly recommend that you use the What-If calculator on the CommSec website to see what the effect of any trade might be on your loan position. The What-If calculator is available once you log‐on to your margin loan page. Find out More 

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