Westpac SFIs are a way to borrow to invest in ASX-listed securities without the requirement to pay the full price for the security upfront.
Buy shares in two instalments, with the second instalment optional. Dividends and distributions are used to offset your interest expense.
SFIs are one of the few eligible geared investments for SMSFs.
SFI give an increased exposure to securities with a lower upfront capital outlay than direct share ownership. With an optional second payment and no margin calls, an SFI has no separate loan applications or credit checks.
Borrow to invest
Increasing your exposure to the share market using SFIs. However potential gains and losses can be magnified.
Receive beneficial interest in the underlying security
You retain the potential to benefit from capital growth, income through dividends and distributions, and franking credits (subject to holding period rules). Please refer to the detailed tax section in the PDS for more details.
Unlock value from existing securities
You don't need to sell your underlying shares. Use them to increase your exposure and, at the same time, free up capital to potentially grow and diversify your portfolio.
A level of protection
If the underlying share price falls and you decide to sell, your loss is limited to the amount you paid as your first instalment.
Buy or sell at any time
SFIs are traded on the Exchange, so you can buy or sell at anytime directly on the ASX.
Optional second payment
Sell at any time and benefit from any capital growth of the SFI. At maturity, if you elect to pay the second instalment, you receive the underlying security; if you elect not to pay, you walk away with no more payments required.
While borrowing to invest more money in shares can increase your potential returns, it can also increase potential losses
The gearing level may change materially as the price of the underlying security and the loan amount change throughout the term. If the price of the underlying security falls, the price of the Westpac SFI will generally fall
The interest capitalised to the loan may be higher than the dividends received from the underlying securities, causing the loan amount to increase
Any rise in interest rates will increase the amount added to the loan as interest
You should also consider the taxation consequences. Investors should seek independent professional tax advice on any taxation matters.
Refer to the Westpac Self-Funding Instalments Product Disclosure Statement (PDF 1.08 MB) for more information.
Westpac SFI PDS (PDF 1.08 MB)
Westpac Instalment Warrants FSG (PDF 56 KB)
ASX Understanding Trading and Investment Warrants (PDF 2.07 MB)
SFI Disclosure Guide 2014 (PDF 229 KB)
SFI Taxation Guide 2014 (PDF 56 KB)
SFI Disclosure Guide 2013 (PDF 525 KB)
SFI Taxation Guide 2013 (PDF 51 KB)
SFI Disclosure Guide 2012 (PDF 642 KB)
SFI Taxation Guide 2012 (PDF 555 KB)
Any reference to taxation matters is a general statement only and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and proposed announced tax amendments. The individual situation of investors may differ and investors should seek independent professional tax advice on any taxation matters.
Westpac Banking Corporation ABN 33 007 457 141, AFSL 233714 (Westpac) is the issuer of the Westpac Self-Funding Instalments Product Disclosure Statement dated 1 February 2011 ('PDS').
Consider the PDS before making any decision to invest. This information does not take into account your personal objectives, financial situation or needs so you should consider its appropriateness having regard to these factors before acting on it.