Smart Gearing: Take control of your geared investment with a Leveraged margin loan

6 November 2025 |Gearing 101

Smart Gearing: Take control of your geared investment with a Leveraged margin loan

6 November 2025 |Gearing 101

An equity gearing strategy increases the amount you have available to invest through the use of borrowed funds, in addition to your own money. Investors use gearing when they expect the return on their investments to be larger than the cost of borrowing. An equity gearing strategy can be facilitated through a margin loan.

Gearing is also available through investment vehicles such as geared ETFs and geared managed funds, which offer another way for an investor to potentially obtain increased returns using gearing.

Choosing the right gearing strategy is important for long-term wealth building. This table compares two gearing strategies available.

Credit Assessment	No	Yes
Gearing Ratio	Set by fund manager. May be rebalanced to target range	Investor-controlled. Must remain within maximum gearing limit set by lender
Asset Allocation	Controlled by the fund manager	Investor-controlled (choice of ASX listed shares, international shares, ETFs, and managed funds)^*
Rebalancing	Controlled by the fund manager. Potentially Frequent	Investor-controlled
Margin Calls & Repayment Plans	Investors are not subject to margin calls or repayment plans	Managed by the investor with agreement by the lender
Potential Loss Limit	Limited to value of investment	Investment and loan amount and any associated borrowing costs
Funding Costs	Potentially lower gross cost; not tax-deductible¹	Higher gross cost; interest expense may be tax-deductible¹
Feature	Internally Geared ETFs/Managed Funds	Margin Loan

Risks

All gearing strategies carry risks, including that gearing can magnify gains as well as losses, and this is true for both strategies outlined above. A margin loan strategy is also subject to risks such as margin calls where the investor is called upon to contribute funds, usually in a short time frame such as 24 hours.

Margin loans can also be subject to interest rate and legislation risk and the loan must be paid back regardless of the value of the investments.

Everything needs to be considered and weighed up risk wise. Depending on an individual’s risk tolerance, an individually held margin loan might be a strategy worth considering.

Conclusion

If you are after the benefits of a gearing strategy, namely the increased amount to invest and don’t want to manage a facility, then a geared ETF or managed fund might be worth considering.

If you think a margin loan strategy seems like the best fit for your circumstances, and you and want to have control over your investments combined with the benefits of a potentially tax effective strategy, a Leveraged margin loan can provide you with the tools you need.

Using a licensed financial adviser may also be worthwhile in developing a portfolio with a long-term goal in mind.

More information

If you’re ready to start building wealth through gearing, we’re here to help. Call us today to speak with a specialist to find out how to get started on 1300 307 807 or contact us.

If you are a financial adviser and want to learn more about recommending gearing through a margin loan to your clients, contact one of our Business Development Managers.

Things you should know

^*Investment types outlined may not be offered, or for all products offered by the same lender.

¹This information does not constitute financial or tax advice. We recommend that you obtain your own independent financial and tax advice on the risks and suitability of this type of investment and to determine whether your interest costs will in fact be fully deductible in the current financial year in your particular circumstance.

Issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). Information is general advice only and does not take into account your personal objectives, financial situation or needs. The views of the author may not represent the views of the broader Bendigo and Adelaide Bank Group of companies (“the Group”). This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. You should consider whether or not the product is appropriate for you, seek professional financial advice and read the Product Disclosure Statement and Incorporated Statements (together, the ‘PDS’) and Product Guide, together with the terms and conditions applying to the product or service, available on the individual product pages of this website before making an investment decision. Not available for a self-managed superannuation fund.

The information provided in this article has not been verified and may be subject to change. It is given in good faith and has been derived from sources believed to be accurate. Accordingly, no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correction of the information and opinions contained in this article. To the maximum extent permitted by law, no entity in the Group, its agents or officers shall be liable for any loss or damage arising from the reliance upon, or use of the information contained in this article.

Smart Gearing: Take control of your geared investment with a Leveraged margin loan