StGeorge Margin lending integrated with ETRADE account - works well, but a few gotchas.
After just investing in managed funds via an Etrade Australia account for a while I thought I’d investigate margin loans.. after checking out
Etrades Comparison of available linked margin loan products I went with the St George option.
Got the account credentials and logged in, all straight forward.. I’ve got an Etrade account that I can buy managed funds with, and a St George margin loan that includes a lot of the managed funds that etrade provides in the approved securities list… all I have to do is transfer the managed funds from my existing account to the new loan account and away I got… not so easy. In fact, impossible. Although I was cheerfully talked through the process by both Etrade and StGeorge staff only to find it.. doesn’t work at all. The way the etrade managed funds system works means it won’t work at all with any of their linked margin loan products.. a bit dissapointing after all the paperwork and effort of setting it up. The intergration only works for buying shares. Bit of a let down but ultimately a learning experience, and has led me to explore other avenues that are similar (but possibly better?) than managed funds but can be bought with the margin loan shared account, such as Listed Investment Companies (see earlier post comparing Streettracks LIC vs Vanguard).
Of course I could go for the funds by just signing up for them directly but I am lazy and want everything managed online with a minimum of messing around with bits of paper, which is what attracted me to etrade in the first place.
The other minor thing is I need to enable the “sweep facility” for deposited cash to actually buy part of the securities being purchased.. none of the documentation or online information makes mention of this (and neither does the online application form linked by etrade), or if it does it is couched in different terminology. Once I sorted all this out however it all works fine, just a few tricks for total newbies to be aware of, though maybe either etrade or stgeorge should publish more info on the actual nuts and bolts of how these two online accounts work together (I suspect it is a new or not frequently used facility as most of the otherwise excellent support staff didnt know how they work either).