BT Cash Management Trust

Once you have borrowed money, interest is calculated on the greater of your daily loan balance and your minimum interest charge, unless you repay the loan in full.

If your loan temporarily falls below your minimum interest charge (as a result of a sale or redemption for instance) you may wish to consider investing the shortfall into the BT Cash Management Trust (CMT). In this way you may earn interest income to partially offset the minimum interest charge on the loan until you're ready to re-enter the market.

For example, assume that you're charged interest on a minimum of $20,000 and you have sold shares to reduce the loan to $15,000:

Example One
Loan balance after sale $15,000
Invested into BT CMT $5,000
New loan balance $20,000

If you use this strategy you may wish to redeem money from the CMT each time you borrow (for example, to buy shares, invest in managed funds or request a cash advance) to keep the loan at the desired balance. For example, suppose you now purchased $3,000 worth of shares:

Example Two
Loan balance after purchase $23,000
Redeemed from BT CMT ($3,000)
New loan balance $20,000

Have you prepaid interest?

If you have prepaid interest on your loan you can also use this strategy to maintain your loan balance at the level on which interest has been paid. The idea is to fully use the loan amount you have paid interest on to earn income.

Establishing and using a Cash Management Trust

If you wish to establish a Cash Management Trust to maintain your loan balance we need your written, signed instructions, along with a completed application form from the current Cash Management Trust prospectus.

Please be aware that transactions will not occur automatically - we need your authorised instructions (either in writing or over the phone if you have established this facility) each time you wish to transact.

 

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