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CE Global Private Equity offers a wide range of investment products and services for retail and corporate investors.
CE Global Private Equity
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Margin Loan Investments
Margin lending can provide eligible investors with access to additional investment capital by borrowing against the value of qualifying assets. At CE Global Private Equity Limited, margin loan investment solutions are considered as part of a broader investment strategy, providing corporate, institutional and eligible individual investors with additional flexibility in the way capital is deployed.
Used appropriately, a margin loan can allow an investor to increase market exposure without first disposing of existing investments. It may also provide greater flexibility when responding to investment opportunities or managing portfolio capital. Because borrowing magnifies both gains and losses, however, margin lending requires careful consideration of leverage, collateral values, borrowing costs and the investor's capacity to withstand adverse market movements.
A Disciplined Approach to Investment Leverage
The use of borrowed capital changes the risk characteristics of an investment portfolio. CE Global Private Equity therefore considers margin lending within the context of the investor's wider financial position, investment objectives, underlying assets and ability to manage changes in both market values and financing requirements.
Key considerations may include:
- Eligible Collateral — Assessment of the assets supporting the facility, including their value, liquidity, volatility and suitability as collateral.
- Loan-to-Value — Consideration of the relationship between the amount borrowed and the value of the assets supporting the loan, including the effect of changing market prices.
- Investment Strategy — Evaluating how borrowed capital will be deployed and whether the proposed investments are consistent with the objectives and risk profile of the overall portfolio.
- Financing Costs — Considering interest charges, fees and other financing costs when assessing the potential economics of a leveraged investment strategy.
- Liquidity — Maintaining appropriate consideration of available liquidity and the investor's ability to respond to changing collateral or financing requirements.
- Downside Risk — Assessing the potential impact of adverse market movements, including circumstances in which additional collateral or a reduction in outstanding borrowing may be required.
Margin lending can enhance the capital available for investment, but additional purchasing power should not be considered independently from the additional risk it creates. A disciplined approach to leverage therefore considers not only the potential return from an investment, but also the consequences if markets move in the opposite direction.
For investors with substantial existing portfolios, access to capital does not necessarily require the immediate sale of investments. A margin lending facility can provide liquidity against eligible assets, potentially allowing existing positions to remain invested while additional capital is deployed elsewhere.
For corporate and institutional investors, this flexibility may form part of a wider approach to capital management and portfolio financing. For eligible individual investors, margin lending may provide additional investment capacity where the associated risks and obligations are properly understood and appropriate to their financial circumstances.
The effectiveness of a margin strategy depends on the relationship between investment performance, financing costs and the amount of leverage employed. These factors can change over time, making ongoing monitoring of both the investment portfolio and borrowing position particularly important.
Understanding the Risks of Margin Lending
Leverage increases exposure to investment markets and can therefore magnify losses as well as gains. If the value of assets supporting a margin loan declines sufficiently, an investor may be required to provide additional collateral, repay part of the outstanding balance or take other action in accordance with the terms of the facility.
In some circumstances, assets may need to be sold at an unfavourable time to reduce borrowing or restore the required collateral position. Interest rates and other financing costs may also change, increasing the cost of maintaining the facility even where the underlying investments have not changed in value.
CE Global Private Equity places particular emphasis on understanding these risks before margin is incorporated into an investment strategy. Appropriate leverage levels, portfolio diversification, liquidity and the ability to withstand adverse market conditions are important considerations when assessing the use of borrowed capital.
