Term Deposits. Through the Macquarie Individually Managed Account (IMA) you have the ability to invest in term deposits as part of your cash portion of your strategic asset allocation. The below diagram illustrates how term deposits held within the IMA work: Term deposits are held in trust for you by MPPM with the selected term deposit provider. Different maturities are available, with investments made on a weekly basis. Term deposits are held individually, therefore deposits under the cap are covered by the Financial Claims Scheme (FSC) (commonly referred to as the Australian Government deposit guarantee). Further information about the FSC can be obtained from the APRA website at ▇▇▇▇.▇▇▇.▇▇ and the APRA hotline on 1300 558 849 (or +▇▇ ▇ ▇▇▇▇ ▇▇▇▇ if calling from overseas). As part of your Investment Policy Statement you can set the parameters to which an investment in term deposits can be made. This is achieved by setting a maximum allocation to term deposits within your target cash weighting. This is subject to a minimum cash balance of two per cent. MPPM will monitor investments in term deposits to ensure it is within this allocation. YOU AND YOUR ADVISER MACQUARIE PRIVATE PORTFOLIO MANAGEMENT Investments into term deposits can be customised by the amount and term (Term Deposit Customisations). To allow for timely investment into term deposits, you authorise your financial adviser to provide these ongoing instructions on your behalf. The investible amount must be greater than $50,000 per deposit with increments of $10,000 and within your maximum allocation when the instruction is provided. You may invest in one or more term deposits as long as the total amount invested is within your maximum allocation when the instruction is provided. There may be a time when your actual account varies from your target asset allocation by more than the 10 per cent, due to such factors as market movement or cash flows. MPPM may be unable to rebalance your account back to your Strategic Asset Allocation until your term deposits mature. At maturity, MPPM will rebalance your account, which may reduce the amount of cash that is able to be reinvested in term deposits. On maturity of any term deposit, the principal and interest will be credited back to your cash holdings. Your financial adviser will be able to provide further instructions regarding the amount and term to be reinvested in term deposits. The amount to be invested and the term may be different to your previous term deposit holdings as long as it is within your maximum term deposit allocation. Early withdrawals from term deposits are typically unavailable. Where required, withdrawal requests will be facilitated by selling down other investments in your account. There are restrictions to breaking a term deposit held in your account and costs may apply. Requests for early withdrawal will be assessed on a case by case basis. Asset allocation Target cash weighting Term deposit allocation Significant risks All investments carry risk. Different investment strategies carry different levels of risk depending on the underlying mix of assets that make up each investment strategy. Assets with the highest long terms returns may also carry the highest level of short term risk. The appropriate level of risk for you will depend on your age, investment time frame, where other parts of your wealth are invested and your individual risk tolerance. It is important to understand that: • the value of your investment will go up and down • investment returns will vary and future returns may be different from past returns, and • returns are not guaranteed and there is always the chance that you may lose some or all of the money you invest in the IMA. When you make an investment, you are accepting the risks of that investment. It is important to understand these risks before deciding to invest. The significant risks for the IMA are described below, but these risks are not exhaustive and there could be other risks that may adversely affect the IMA. You should seek your own professional advice on the appropriateness of this investment for your particular circumstances and financial objectives. Market risk Market risk refers to changes in the prices of investments in your account that may result in loss of principal or large fluctuations in the valuation of your investment within short periods of time. Factors that drive changes in asset prices include: • the changing profitability of companies and industries • the liquidity of securities, particularly for small capitalisation equities or small companies with limited volume of security issuances • the changes in economic cycles and business confidence • the country in which the market is located and its government and central bank policies, its economic or social developments, and instances of instability such as recession or armed conflict • where there is an emerging market exposure, which is generally riskier than developed markets due to factors such as lower liquidity, the potential for political unrest, the increased likelihood of sovereign intervention (including default and currency intervention), currency volatility, and legal system instability. Strategy and model risk MPPM uses investment and risk analytical processes and models in its IMA strategies. However these processes and models may not successfully select profitable investments, manage risk or perform in a manner to which they have historically performed or were intended to perform. This may have an adverse effect on the performance of your account. Volatility risk Volatility risk refers to the potential for the price of securities in your account to vary, sometimes markedly and over a short period of time. As an indicator of risk, the greater the volatility of returns the more likely it is that returns will differ from those expected over a given time period. Generally, the higher the potential return, the higher the risk and the greater the chance of substantial fluctuations in returns over a short period of time. In particular, investments in equity securities are traditionally towards the higher end of the risk--return spectrum. This may lead to fluctuations in the value of your account, including fluctuation over the period between a withdrawal request being made and the time of payment. Markets are volatile and indeed volatility in some markets can be at very high levels. Security specific and concentration risk Each investment in a company’s securities is subject to the risk of that particular company’s performance due to factors that are pertinent to that company, the sector of the market to which the company belongs, or the equity market generally. This risk also includes changes in credit ratings from rating agencies. The fewer the number of holdings in your account, the higher the concentration risk. The more concentrated your account is, the greater the risk that poor performance in a group of securities may significantly affect the performance of your account. Currency risk Currency risk is the risk that fluctuations in exchange rates between the Australian dollar and foreign currencies may cause the value of international investments to decline significantly. If your account includes exposure to international assets, they may not be hedged back to Australian dollars and therefore your investment may be exposed to currency risk. Investment manager risk Investment manager risk refers to the risk that the investment manager and/or the manager’s investment strategy will not achieve its performance objectives or not produce returns that compare favourably against its peers. Additionally, there is the risk that a manager’s investment strategy may not prove to be effective. Many factors can negatively impact the manager’s ability to generate acceptable returns from its security selection process, including the loss of key staff. Implementation risk There is a risk that the performance of your account will differ from that of the investment strategies. This occurs due to factors such as differences in the buy and sell prices of investments compared to the investment strategies, fees, movements of cash and securities into and out of your account, slight differences in weights of holdings due to the requirement for a minimum cash holding of two per cent and use of a minimum transaction size, and external factors, for example if trading in a particular security is subject to liquidity constraints or has been restricted or suspended in the market. Customisation risk There is a risk that account customisation will impact the performance of your investments and may result in negative returns and/or underperformance of your account relative to your nominated investment strategy. Customisation could be explicit, that is restrictions included in your investment policy statement, or implicit, such as outcomes resulting from the management of your account to suit your particular tax circumstances. Counterparty and credit risk Counterparty risk is the risk of loss due to a counterparty not honouring a commitment which may cause the value of your account to fall. Counterparties include custodians, brokers and settlement houses. Credit risk is the risk that for cash and interest rate investments, income and/or your capital investment will not be repaid due to the financial position of the financial institution or issuer of that investment. Liquidity risk Particular securities or investments may be difficult to purchase or sell, preventing the IMA from closing out its position or rebalancing within a timely period and at a fair price. As a result withdrawal requests may not be able to be fully met when they are received. Liquidity risk may potentially be amplified where an account invests in listed interest rate securities and unlisted managed funds due to the illiquid nature of these assets. For term deposits, liquidity risk is the risk of not being able to access your investment in a term deposit prior to the maturity date. Interest rate risk Movements in domestic and international interest rates may cause the value of your investment to decline. Leverage risk If you have borrowed to fund your investment, you will be subject to a number of additional risks including, but not limited to, margin calls as a result of market volatility, increased losses as a result of increased exposure, and interest rate
Appears in 1 contract
Sources: Individual Managed Account Agreement
Term Deposits. Through the Macquarie Individually Managed Account (IMA) you have the ability to invest in term deposits as part of your cash portion of your strategic asset allocation. The below diagram illustrates how term deposits held within the IMA work: Term deposits are held in trust for you by MPPM with the selected term deposit provider. Different maturities are available, with investments made on a weekly basis. Term deposits are held individually, therefore deposits under the cap are covered by the Financial Claims Scheme (FSC) (commonly referred to as the Australian Government deposit guarantee). Further information about the FSC can be obtained from the APRA website at ▇▇▇▇.▇▇▇.▇▇ and the APRA hotline on 1300 558 849 (or +▇▇ ▇ ▇▇▇▇ ▇▇▇▇ if calling from overseas). As part of your Investment Policy Statement you can set the parameters to which an investment in term deposits can be made. This is achieved by setting a maximum allocation to term deposits within your target cash weighting. This is subject to a minimum cash balance of two per cent. MPPM will monitor investments in term deposits to ensure it is within this allocation. YOU AND YOUR ADVISER MACQUARIE PRIVATE PORTFOLIO MANAGEMENT Investments into term deposits can be customised by the amount and term (Term Deposit Customisations). To allow for timely investment into term deposits, you authorise your financial adviser to provide these ongoing instructions on your behalf. YOU AND YOUR ADVISER MACQUARIE PRIVATE PORTFOLIO MANAGEMENT The investible amount must be greater than $50,000 per deposit with increments of $10,000 and within your maximum allocation when the instruction is provided. You may invest in one or more term deposits as long as the total amount invested is within your maximum allocation when the instruction is provided. There may be a time when your actual account varies from your target asset allocation by more than the 10 per cent, due to such factors as market movement or cash flows. MPPM may be unable to rebalance your account back to your Strategic Asset Allocation until your term deposits mature. At maturity, MPPM will rebalance your account, which may reduce the amount of cash that is able to be reinvested in term deposits. On maturity of any term deposit, the principal and interest will be credited back to your cash holdings. Your financial adviser will be able to provide further instructions regarding the amount and term to be reinvested in term deposits. The amount to be invested and the term may be different to your previous term deposit holdings as long as it is within your maximum term deposit allocation. Early withdrawals from term deposits are typically unavailable. Where required, withdrawal requests will be facilitated by selling down other investments in your account. There However, early withdrawals from term deposits are restrictions available. Please be aware that restrictions, notice periods, delays and break costs (which may include a reduced interest payment), relating to breaking early withdrawals vary depending on the term deposit provider. Some term deposit providers have introduced a notice period of 31 days before proceeds from a break request will be processed and made available. Depending on the term deposit provider, this may apply to all new term deposits including roll overs. Combined with MPPM processing times, where this new notice period applies, it may take significant time to process a request to break a term deposit held in prior to maturity and for your account and costs may apply. Requests for early withdrawal will funds to be assessed on a case by case basisavailable. Asset allocation Target cash weighting Term deposit allocation Significant risks All investments carry risk. Different investment strategies carry different levels of risk depending on the underlying mix of assets that make up each investment strategy. Assets with the highest long terms returns may also carry the highest level of short term risk. The appropriate level of risk for you will depend on your age, investment time frame, where other parts of your wealth are invested and your individual risk tolerance. It is important to understand that: • the value of your investment will go up and down • investment returns will vary and future returns may be different from past returns, and • returns are not guaranteed and there is always the chance that you may lose some or all of the money you invest in the IMA. When you make an investment, you are accepting the risks of that investment. It is important to understand these risks before deciding to invest. The significant risks for the IMA are described below, but these risks are not exhaustive and there could be other risks that may adversely affect the IMA. You should seek your own professional advice on the appropriateness of this investment for your particular circumstances and financial objectives. Market risk Market risk refers to changes in the prices of investments in your account that may result in loss of principal or large fluctuations in the valuation of your investment within short periods of time. Factors that drive changes in asset prices include: • the changing profitability of companies and industries • the liquidity of securities, particularly for small capitalisation equities or small companies with limited volume of security issuances • the changes in economic cycles and business confidence • the country in which the market is located and its government and central bank policies, its economic or social developments, and instances of instability such as recession or armed conflict • where there is an emerging market exposure, which is generally riskier than developed markets due to factors such as lower liquidity, the potential for political unrest, the increased likelihood of sovereign intervention (including default and currency intervention), currency volatility, and legal system instability. Strategy and model risk MPPM uses investment and risk analytical processes and models in its IMA strategies. However these processes and models may not successfully select profitable investments, manage risk or perform in a manner to which they have historically performed or were intended to perform. This may have an adverse effect on the performance of your account. Volatility risk Volatility risk refers to the potential for the price of securities in your account to vary, sometimes markedly and over a short period of time. As an indicator of risk, the greater the volatility of returns the more likely it is that returns will differ from those expected over a given time period. Generally, the higher the potential return, the higher the risk and the greater the chance of substantial fluctuations in returns over a short period of time. In particular, investments in equity securities are traditionally towards the higher end of the risk--return spectrum. This may lead to fluctuations in the value of your account, including fluctuation over the period between a withdrawal request being made and the time of payment. Markets are volatile and indeed volatility in some markets can be at very high levels. Security specific and concentration risk Each investment in a company’s securities is subject to the risk of that particular company’s performance due to factors that are pertinent to that company, the sector of the market to which the company belongs, or the equity market generally. This risk also includes changes in credit ratings from rating agencies. The fewer the number of holdings in your account, the higher the concentration risk. The more concentrated your account is, the greater the risk that poor performance in a group of securities may significantly affect the performance of your account. Currency risk Currency risk is the risk that fluctuations in exchange rates between the Australian dollar and foreign currencies may cause the value of international investments to decline significantly. If your account includes exposure to international assets, they may not be hedged back to Australian dollars and therefore your investment may be exposed to currency risk. Investment manager risk Investment manager risk refers to the risk that the investment manager and/or the manager’s investment strategy will not achieve its performance objectives or not produce returns that compare favourably against its peers. Additionally, there is the risk that a manager’s investment strategy may not prove to be effective. Many factors can negatively impact the manager’s ability to generate acceptable returns from its security selection process, including the loss of key staff. Implementation risk There is a risk that the performance of your account will differ from that of the investment strategies. This occurs due to factors such as differences in the buy and sell prices of investments compared to the investment strategies, fees, movements of cash and securities into and out of your account, slight differences in weights of holdings due to the requirement for a minimum cash holding of two per cent and use of a minimum transaction size, and external factors, for example if trading in a particular security is subject to liquidity constraints or has been restricted or suspended in the market. Customisation risk There is a risk that account customisation will impact the performance of your investments and may result in negative returns and/or underperformance of your account relative to your nominated investment strategy. Customisation could be explicit, that is restrictions included in your investment policy statement, or implicit, such as outcomes resulting from the management of your account to suit your particular tax circumstances. Counterparty and credit risk Counterparty risk is the risk of loss due to a counterparty not honouring a commitment which may cause the value of your account to fall. Counterparties include custodians, brokers and settlement houses. Credit risk is the risk that for cash and interest rate investments, income and/or your capital investment will not be repaid due to the financial position of the financial institution or issuer of that investment. Liquidity risk Particular securities or investments may be difficult to purchase or sell, preventing the IMA from closing out its position or rebalancing within a timely period and at a fair price. As a result withdrawal requests may not be able to be fully met when they are received. Liquidity risk may potentially be amplified where an account invests in listed interest rate securities and unlisted managed funds due to the illiquid nature of these assets. For term deposits, liquidity risk is the risk of not being able to access your investment in a term deposit prior to maturity date. Depending on the term deposit provider, you may be able to access your investment in a term deposit prior to the maturity datebut you may have to provide a notice period of 31 days. If the remaining time to maturity is less than 31 days, you will have to wait until maturity to access your investment. Interest rate risk Movements in domestic and international interest rates may cause the value of your investment to decline. Leverage risk If you have borrowed to fund your investment, you will be subject to a number of additional risks including, but not limited to, margin calls as a result of market volatility, increased losses as a result of increased exposure, and interest rate
Appears in 1 contract
Sources: Individual Managed Account Agreement