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WHOLESALE INVESTORS ONLY
Structured Investment - IndexPro
Date: 20/01/2025
IndexPro Portfolio Strategy:
The IndexPro Strategy is a sophisticated investment approach designed to provide targeted exposure to Australian equities and floating rate notes over a 5-year term. It comprises two distinct components: an ASX200 Structured Investment providing growth exposure (80% allocation) and an Active Fixed Income component (20% allocation).
The structured investment offers 130% participation (1.3x) to positive ASX200 price movements, while limiting downside risk to a maximum loss of 15% at maturity (subject to issuer risk). The fixed income component, is exposed to Coolabah Floating-Rate High Yield Fund, which aims to provide regular income and additional downside protection from investment grade floating rate notes.
How It Works
Component 1: ASX200 Structured Investment (80% Allocation)
- Enhanced growth exposure: Provides 130% (1.3x) to positive ASX200 price movements.
- Limited downside: 85% Capital Protection (Maximum loss capped at 15% at maturity).
- 5-year investment term.
- Please refer to Term Sheet for detailed risks, including but not limited to, the credit risk of the issuer.
Component 2: Active Fixed Income (20% Allocation)
- Investment in the Coolabah Floating-Rate High Yield Fund (APIR: ETL6855AU)
- Aims to provide regular income by actively investing in a portfolio of investment-grade Australian Floating-Rate Notes (FRNs).
- The Fund currently has a target running yield and yield to maturity of 9% p.a. and 11% p.a. respectively after fees and expenses.
- Please refer to the detailed “Risks” section in the PDS and to the Fund’s Target Market Determination (TMD)^.
By combining both components together, it provides investors the opportunity for amplified returns in positive markets with a defined risk profile, and potentially a more favourable risk-return profile compared to direct investment in the index.
Important Considerations
- The strategy is made up of two (2) separate investments.
- Past performance is not a reliable indicator for future performance.
- Each component does not provide guarantee of investment outcomes.
- Please refer to Key Documents, including Investment Presentation, Term Sheet, IM and or Fund Documentation for key risks and terms.
COMPONENT 1: INDEX PRODUCT
of IndexPro is a structured investment product offering exposure to the ASX 200 index (excluding dividends), with additional features aimed at both downside protection and leveraged upside.
Investment Structure
- Principal Protection (85%)
- Guarantees 85% of the initial investment at maturity (subject to issuer credit risk).
- Maximum loss is therefore capped at 15% of the initial investment, regardless of the index’s performance over the 5-year term.
- Leveraged Upside Participation (130%)
- Provides 1.3X leverage on any positive performance of the ASX 200 index.
- For every 1% increase in the ASX 200, the product returns 1.3% to the investor.
Payoff Structure
- Positive Market Performance
- Scenario: If the ASX 200 index rises over the 5-year term.
- Calculation: Maturity Value = Initial Investment + (Initial Investment × ASX 200 Performance × 130%)
- Example: If the ASX 200 rises by 40% over 5 years:
- $100,000+($100,000×40%×130%)=$152,000
- Negative Market Performance
- Scenario: If the ASX 200 index declines over the 5-year term.
- Outcome:
- Losses are limited to a maximum of 15% of the initial investment.
- At maturity, investors receive at least 85% of their initial investment.
- Example: If the ASX 200 falls by 30% over 5 years:
- $85,000(minimum payout on a $100,000 investment)
Key Features
- Investment Term: 5 years
- Principal Protection: 85% (subject to issuer credit risk)
- Upside Leverage: 130%
- Maximum Return: Uncapped
- Reference Asset: ASX 200 index
COMPONENT 2: ACTIVE FIXED INCOME
Coolabah Floating-Rate High Yield Fund
This component of the strategy aims to provide enhanced income and additional downside protection through active management of a portfolio of investment-grade Australian Floating-Rate Notes (FRNs).
Key features include:
- Investment Focus: Primarily invests in cash securities and investment-grade floating-rate Australian bank-issued senior and tier 2 bonds.
- Interest Rate Sensitivity: Very low interest rate risk due to the variable nature of FRN payments, which reset monthly or quarterly.
- Yield Profile: As of October 2024, the fund had a running yield of 7.53% pa.
- Credit Quality: Maintains a weighted-average credit rating of A+.
- Performance: Since inception in December 2022, the fund has returned 12.20% pa gross (11.30% pa net) with a volatility of 1.44% pa.
The fund’s structure provides several benefits to the overall portfolio strategy:
- Income Generation: Offers potential for regular income, complementing the capital growth focus of Component 1.
- Downside Protection: Acts as a buffer during negative market performance, helping to reduce overall portfolio volatility.
- Low Correlation: Performance is independent of Component 1, enhancing diversification.
- Liquidity: Daily pricing and withdrawal requests, providing flexibility.
THIS INVESTMENT IS FOR WHOLESALE INVESTORS ONLY (S708)
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