Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What are the risks of Portfolio LVR?

April 26, 2017LVR portfolio

0

Posted

What are the risks of Portfolio LVR?

1 Answer

0

Posted

Portfolio LVR increases your portfolio’s lending values which you can utilise to increase your investment exposure. This may have the effect of multiplying any losses, as well as gains, in your 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 at www.commsec.com.