Investment-backed lending has become an increasingly relevant tool for investors seeking access to capital without altering their long-term portfolio strategy. Instead of selling assets to generate liquidity, investors can borrow against the value of their investment holdings. This approach allows portfolios to remain intact while still providing funds for other financial priorities.
At its core, investment-backed lending involves using an investment portfolio as collateral for a loan. The lender assesses the composition and risk profile of the portfolio before determining how much capital can be advanced. The facility is typically structured as a percentage of the portfolio’s market value. In many cases, the available loan may reach up to around 60% of the portfolio value, although the precise level depends on factors such as diversification, asset types, and volatility.
Selling assets to raise funds can interrupt an investment strategy and may force disposals at an unfavourable moment in market cycles. By contrast, borrowing against the portfolio enables investors to meet liquidity needs without reducing their investment allocation.
Arbuthnot Banking Group PLC (LON:ARBB), operating as Arbuthnot Latham, offers private and commercial banking products and services in the United Kingdom. Established in 1833, Arbuthnot Banking is headquartered in London, United Kingdom.
