The Linear Continuously Protected SMA is now available, providing Investors with exposure to a portfolio of direct Australian equities overlaid with a Capital Protection strategy that aims to protect 80% of the portfolio’s highest ever value.
Capital Protection is applied by rebalancing between equities and cash and through the use of a Swap Contract. Unlike other Capital Protected products, there is no minimum investment term and investors are the beneficial owners of the investment portfolio. The Linear Continuously Protected SMA provides a cost effective, easy to understand and completely transparent professionally managed and administered portfolio. All dividends, franking credits and income payments are credited directly to the portfolio.
Some of the fantastic features of this new product include:
- Capital Protection equal to 80% of the highest ever value of the portfolio.
- No minimum investment term – Investors can redeem their investment at any time.
- A competitive total annual fee for Capital Protection, administration and investment management ranging from 1.49% to 2.26%pa, inclusive of GST.
- Investors retain beneficial ownership of the shares in their portfolio, with dividends paid into the Investor’s cash Account within the Scheme.
- Choice of four Model Portfolios – Ralton Leaders Continuously Protected, UBS HALO (High Alpha Long Only) Continuously Protected, AUI Platypus Australian Equities SMA Portfolio Continuously Protected.
- No cash locking of the portfolio.
- The ability to transfer between Capital Protected and non-protected Model Portfolios.
- Secure online access to view Account details, portfolio valuations and investment performance.
- Margin lending possibilities – the product has been approved by two margin lenders.
About the Capital Protection Strategy
The aim of the Capital Protection strategy is to ensure that 80% of the highest ever value of your portfolio is protected. This means not just 80% of the value of your initial investment, but also 80% of any subsequent increases in the value of your investment portfolio.
The Capital Protection Strategy is a Two-part Process
To ensure the value of an Investor’s portfolio does not fall below the Lock-in Level, a Target Exposure is calculated daily that determines the preferred allocation between the Model Portfolio and cash. In simple terms, the Target Exposure aims to increase the allocation to the Model Portfolio when it is increasing in value and similarly, to decrease the allocation to the Model Portfolio when it is decreasing in value.
Where appropriate, Linear (as the Responsible Entity) rebalances your portfolio’s allocation between the Model Portfolio and cash to keep it in line with the Target Exposure.
In addition, Linear enters into a SPP Swap Contract in order to protect the Investor’s portfolio against a significant decline in value. If the portfolio value falls below the Lock-in level, the SPP Swap will be exercised and the proceeds will be credited to the Investor’s cash account. This will restore the portfolio value to the Lock-in level.
Features In More Detail
No minimum investment term. Redeem your investment at any time. Unlike many other Capital Protected products on the market, the LCPSMA is a continuously open product and applications can be made any time. Importantly, once invested, there is no minimum investment term that applies to Investors. Investors can redeem all or part of their portfolio at any time. Another great feature of the LCPSMA is that it is possible to remove the Capital Protection strategy while remaining invested in the underlying securities.
Beneficial Ownership
One of the great advantages of the LCPSMA is that Investors maintain beneficial ownership of the shares in their portfolio. The shares are held by a third party custodian, streamlining the administrative tasks associated with direct ownership including managing direct communication material and corporate action requirements. Any dividends generated by the portfolio are paid directly into the Investor’s cash Account within the Scheme. Also, Investors have the flexibility of managing the capital gain implications of their portfolio by choosing their preferred tax parcel accounting method. Options include first in first out (FIFO), maximise capital gains or maximise capital losses.
Cost Effective Investment
The LCPSMA offers fantastic value for a full service administration platform.
The total annual fee for Capital Protection, administration and investment management ranges from 1.49%pa to 2.26%pa, inclusive of GST. Institutional brokerage arrangements have also been arranged to keep Investor’s transaction costs to a minimum and where possible, ‘trade netting’ will take place to further reduce the cost to investors.
No Cash Locking
At times, in order to maintain the value of the Investor’s portfolio, the Target Exposure may result in a 100% allocation to cash. If this occurs, the portfolio will not be locked into cash for the remaining period of investment. On an ongoing basis, the Target Exposure will always look to increase the allocation to the Model Portfolio where this would result in an increase in the portfolio value. This ensures that investors always have the possibility of experiencing upside improvement in the value of their investment portfolio.
Online Access
Linear has developed a new secure Online Client Access portal for Investors. Once logged in, Investors can view their Account details, portfolio valuations and investment performance. Investors also have access to a wide range of up-to-date consolidated reports that allow accurate management of tax positions. Importantly, audited year-end taxation reports are provided online to assist in the preparation of tax returns.
Margin Lending Approved
Margin lending is a great way to increase your exposure to the share market. The LCPSMA has already been approved by two margin lenders. For Investors that choose to use a margin lending facility, all or part of their holdings in the LCPSMA will be used as security. These holdings, held by the custodian, will be held separately from other LCPSMA Investor’s assets.
By maintaining a margin loan LVR of 75% or less, the Capital Protected nature of the LCPSMA greatly reduces the likelihood that an Investor will be subject to a margin call.
How To Invest
To invest in the Linear Continuously Protected SMA you must read the Product Disclosure Statement (PDS) and complete the application form. In order to receive the PDS you must be an authorised financial adviser, registered with Linear.
To find out more contact our Business Development team on 1300 669 891.