Diversified Loan Feature

The St.George Margin Loan Diversified feature recognises the potential benefits of holding a diversified portfolio of securities by providing investors with a wider range of acceptable securities.

For investors who hold three or more qualifying securities, the Diversified feature provides access to an extended range of equities, (also known as “bonus” securities), where an LVR would not normally be applied. Once a portfolio is recognised as Diversified, these bonus securities become acceptable security, and contribute to additional borrowing limit.

Diversified Feature - Getting Started

Existing Customers

There is no need to specifically apply to access this feature. Once your loan meets our diversification criteria you will automatically qualify for access to the feature and the extended ASL.

New Customers

• Read the St.George Margin Lending Facility Agreement
• Read the St.George Margin Lending Margin Loan Product Disclosure Statement
• Read the St.George Margin Lending Financial Services Guide
• Complete and return the following to St.George Margin Lending:
  • St.George Margin Lending Application Form (PDF, 669 KB)
  • Third Party Security Provider (PDF, 320KB) (if applicable)

Diversified Loan Feature – Frequently Asked Questions

1.  What is the Diversified Loan feature?

   This feature provides additional gearing choice to clients who hold a diversified portfolio. For investors with three or more qualifying securities, the Diversified Loan feature provides access to bonus acceptable securities.

2.  What are the qualification criteria?

   To qualify for the Diversified Loan feature, you must have three or more qualifying securities in your portfolio with no one qualifying security representing more than 50% of your portfolio.

   If you meet the qualifying criteria you can gear into bonus acceptable securities.

   Qualifying securities are shares and managed funds noted on the Acceptable Securities List (ASL). You can view the ASL at www.stgeorgemarginlending.com.au/sgbasl.

3.  What are the bonus securities?

   Bonus acceptable securities are equities that you can gear into if you hold a diversified portfolio.

   The bonus acceptable securities are detailed on the ASL – you can view this at www.stgeorgemarginlending.com.au/sgbasl.

4.  Do I automatically receive access to the Diversified Loan feature if my loan satisfies the qualification criteria?

   Yes, once your loan satisfies our qualification criteria, you will automatically qualify for access to the feature.

5.  How much can I borrow?

   The amount you can borrow is determined by your credit limit and the value and composition of the shares, managed funds or cash you provide as security.

   If your portfolio qualifies for the Diversified loan feature you can receive an additional borrowing limit based on the value of bonus acceptable securities. Bonus acceptable securities are currently assigned an LVR of 40%. For the purpose of calculating additional borrowing limit the value of bonus acceptable securities is subject to a cap of 20% of the market value of the qualifying securities.

   Here’s how it works
   Consider an investor who holds the following portfolio. It qualifies for the diversified feature, as the investor holds three securities held on the standard St.George ASL. You can see the additional gearing that the investor can then access from the bonus securities held.

   Security			Market Value		Standard LVR		Diversified LVR		Borrowing Limit
   Standard ASL
   WBC			$40,000		75%				$30,000
   PDN			$45,000		45%				$20,250
   RIO			$15,000		75%				$11,250
   Standard Total			$100,000						$61,500
   Bonus Securities
   ABU			$30,000		0%		40%		$12,000
   ROL			$10,000		0%		40%		$4,000
   Total			$40,000						$16,000
   Diversified Cap (20% of total portfolio)			$20,000		n/a		40%		$8,000
   Total Borrowing Limit Available									$69,500
   Additional Borrowing Limit Available									$8,000

6.  Are security weightings considered in assessing a diversified portfolio?

   The weighting of securities in your portfolio is not specifically considered; however a concentrated portfolio will not be eligible for the Diversified Loan feature. A portfolio is concentrated if you have more than 50% of your total holdings in a single stock.

   Concentration in any single stock can increase the risk of a margin call in the event of a significant decrease in the value of that stock.

7.  What are the benefits of the Diversified feature?

   The Diversified Loan feature not only provides access to a greater range of acceptable securities for gearing, it could also provide an additional cushion against margin calls.

   • More choice - with a wider range of shares to choose from, you can gear into the shares you want to
   • Diversification - by investing in a wider range of shares you have greater protection against the impact of one or more investments underperforming
   • Less risk of a margin call – the greater the level of diversification, the lower the probability of a margin call

8.  What are the risks of the Diversified Margin Loan feature?

   • Gearing into bonus acceptable securities may increase your borrowing capacity. This may have the effect of multiplying any losses, as well as gains, in your portfolio.
   • Any trading may affect your gearing ratios and maximum borrowing limit.
   • Should the loan no longer be diversified through changes in the underlying securities, the additional borrowing limit will be removed and this may result in the loan going into margin call.

9.  What happens if I sell down to fewer than three qualifying securities?

   If you sell a qualifying security leaving fewer than three qualifying securities, the loan will no longer qualify for the Diversified Loan feature and the additional borrowing limit will be removed.

   We recommend that you use the Simulator within Internet Account Access on the St.George website (www.stgeorgemarginlending.com.au) to see what the effect of any trade might be on your loan.