What is Portfolio LVR?

Portfolio LVR is an enhanced feature for CommSec Margin Loan customers who hold diversified portfolios.

If you qualify for Portfolio LVR, you’ll receive higher LVRs for approved securities. This provides you with a larger cover against margin calls, plus the potential to increase your purchasing power. Portfolio LVR also gives you the opportunity to borrow against “bonus shares” – this means we’ll offer an LVR to equities that don’t normally qualify for lending.

Our approved security lending ratios can be found in the Accepted Shares and Accepted Managed Funds Approved Securities Lists.


How do I qualify for Portfolio LVR?

If you hold five or more approved securities in your portfolio, you will qualify for Portfolio LVR. When we say “approved securities”, we mean any securities (approved equities, managed funds and cash) that are considered when calculating your portfolio’s lending value.

Once our systems recognise that your portfolio meets the diversification criteria or five or more approved securities, you’ll automatically receive Portfolio LVR on approved equities. Approved equities are the ones listed in our approved list – they qualify for the additional LVRs offered by Portfolio LVR. (Managed funds, cash or other non-equity holdings in your portfolio are not included.)


How is Portfolio LVR calculated?

Portfolio LVR is calculated as follows:

  • If the approved equity has a non-zero standard LVR: Portfolio LVR = Standard LVR + 5%
  • If the approved equity has a 0% standard LVR: Portfolio LVR = 40%

Standard LVR is the LVR applicable to equities when an investor holds 2-4 securities in their portfolio.

For a list of Approved Securities click here.


What are the risks of Portfolio LVR? Can I go into a margin call as a result of selling a security?

Portfolio LVR increases your portfolio's lending value, so it allows you to increase your investment exposure if you choose to do so. The main risk is that this may have the effect of multiplying any losses (as well as gains) in your portfolio.

If your portfolio qualifies for Portfolio LVR, certain trades you place may significantly affect your gearing ratios. For example, if you sell down to fewer than five approved securities, your portfolio will be classified as “undiversified” and you’ll lose the benefits of Portfolio LVR. As a result, you will only receive standard LVRs or single stock LVRs. Further, the lending value of bonus stocks will fall to 0%. This may affect your security value and could potentially put you in margin call.

We strongly recommend that before placing sell orders on your portfolio, you use the “What if” Calculator on our website to determine the impact the sale will have on your loan position.


For more info, please read our guide on Portfolio LVR, or call our Margin Lending team on 13 17 09 between 8am and 6pm Monday to Friday (Sydney time) or +61 2 9115 1402 if calling from overseas.

See CommSec Margin Loan Risk Disclosure, Important Information and Disclaimer. Consider the product disclosure statement available from the Commonwealth Bank of Australia, as the product issuer, at commsec.com.au before making any decision about the product and whether it is appropriate for you.

 

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