That largely depends on the type of leverage used (not all individual margin loans have the same conditions). It's possible to get pretty good terms as an individual in some circumstances (mostly if the loans are smaller and personally guaranteed), mostly by getting loans without margin calls attached. If you own a home, you can trivially borrow against it to invest without the risk of a margin call.
It's all tradeoffs - the broader the conditions at which a bank can recall your margin, the cheaper the interest and lower personal guarantee requirements (some may not hold you personally liable for negative balances - check your T&Cs). Funds can obviously borrow more, and at lower interest rates because of that though. Obviously their loans will be wound up on the way down no matter what, because the bank can't get money out of a negative balance like they would an individual.
Funds also don't tend to all-in on three tech stocks, so the fact they are very exposed to volatility with that type of leverage is less of an issue.
Nothing you've said has any relevance to this discussion. Regardless of what kind of leverage you use, if you're the one using it then you can end up with a negative balance putting you in debt. Case closed.
As for your other comment trying to be pedantic about funds owning three stocks, there are numerous publicly traded leveraged funds that trade just a single stock, one single stock [1]. They are known as single-stock ETFs and the purpose of these funds is specifically to provide an indirect form of leverage to investors. For example, IRA accounts are forbidden from using leverage, but someone can use an IRA account to purchase a leveraged ETF including a single stock ETF.
There's definitely margin products that will guarantee you aren't liable for the debt (but correspondingly will margin call you and limit the debt/equity ratio), and there are margin products that are the opposite (no margin calls, but full recourse and liability for negative balances).
The point is it's not cut and dry that the market geared equity solution is superior (though, IMO, the individual advantage lays on the side of things without margin calls, but full recourse - you can ride through a downturn without being forced to sell, assuming you keep your job and other risks etc etc).
Those single stock ETFs are significantly more limited than full-market geared funds (1.5x rather than more typical 2-3x). Equity geared ETFs are definitely just straight up more convenient (and safer) for the vast majority of people and situations though, I agree with you on that.
Can you provide a reference for a single broker that guarantees no liability for holding negative balance in a margin account, because as-is what you've described is a violation of FINRA rules and I'm fairly certain that such a product doesn't exist but would be interested in seeing the precise details.
I don't want a fancy explanation of how it works, I would like to know the name of a single brokerage that offers this product because as I said, I don't think it exists as it is frankly a pretty basic violation.
At least in Australia, IBKR used to have a fairly limited margin product that actually precluded you from being exposed to a possibly negative balance - I've probably overgeneralised that case (or thought it was more common than it is). I can't find a reference to those particular terms anymore. Obviously being IBKR, they have very aggressive auto-liquidation if you get margin called (ie. you don't get one).
I did end up finding the specific agreement - it pertains to Australian retail clients (https://gdcdyn.interactivebrokers.com/Universal/servlet/Regi...), and clauses 3 and 7 lay out that retail clients are not liable for a negative balance arising from a margin liquidation. Retail clients for Australia have pretty limited margin (25 or 50k iirc), so this isn't super high risk for most people regardless (can't lose that much money).
The other stuff I talk about arises from other products in Australia as well - it's possible to borrow money and buy shares without being exposed to margin calls, so long as you make repayments on the loan. It's pretty different to a traditional margin account though, and only really applies to ETFs (NAB Equity Builder). I also imagined that existed elsewhere, but really I'm only speaking from what I've seen available in Australia.
Nothing you claim is stated in that document you linked and as someone who has done a great deal of business with IBKR for the better part of 15 years now as well as one of the largest market makers on the Australian markets making up approximately 5% of all ASX and CHIX volume, I assure you there absolutely no protection provided to a client whose balance enters into a negative position.
Clause 3.A.e specifically states that trading on margin can result in a loss of funds greater than that deposited into your account and that you accept that risk.
In conjunction with Clause 7.K which states that you must reimburse the broker for any liabilities as a result of the liquidation undertaken by the broker.
You are always on the hook for the full amount of losses on margin.
Fair enough - I looked at terms 7F (retail clients) - There was more context when I read about it a couple of years ago, or perhaps I'm simply misremembering (and I'm hardly a lawyer..)
It's all tradeoffs - the broader the conditions at which a bank can recall your margin, the cheaper the interest and lower personal guarantee requirements (some may not hold you personally liable for negative balances - check your T&Cs). Funds can obviously borrow more, and at lower interest rates because of that though. Obviously their loans will be wound up on the way down no matter what, because the bank can't get money out of a negative balance like they would an individual.
Funds also don't tend to all-in on three tech stocks, so the fact they are very exposed to volatility with that type of leverage is less of an issue.