Investors can enjoy many of the benefits of ownership of ASX listed securities, including dividends or distributions and franking credits (subject to eligibilities), with no margin calls.
SFIs are traded on the ASX, making them accessible to investors who want to apply directly to Westpac or purchase on-market through a broker.
Westpac SFIs could be suitable for individual investors or self-managed superannuation funds (SMSFs) wanting to increase their exposure to the Australian share market without the worry of margin calls.
To be eligible, the applicant must be:
The Westpac SFIs allow your client to purchase ASX-listed securities (usually top 50 by market capitalisation) and certain exchange traded funds in two instalments. By borrowing to invest, your client doesn’t need to outlay as much capital upfront and can make an optional second payment via a loan amount.
ASX listed securities generally provide capital growth through rising share and unit prices over the long term. Your clients receive many of the benefits of ownership of listed securities, including dividends or distributions and franking credits (subject to eligibility).
Buying and selling Westpac SFIs is easy and accessible. Investors can buy and sell them directly on the ASX through a broker or apply to Westpac without any need for a separate loan application or credit check.
As the holder of Westpac SFIs, your client will never be subject to margin calls with respect to the Loan.
Any dividends are automatically used to reduce the Loan amount and annual interest payments are automatically added to the Loan. The client can choose to pay the second instalment or sell the SFIs at the end of the Term.
Interest payments may be tax deductible and franking credits are issued with dividend payments. Please refer to the detailed tax section of the PDS.
Westpac Self-Funding Instalments are eligible geared investments for SMSFs.
There are a number of associated risks with Self-Funding Instalments, as summarised below. Read the Product Disclosure Statement for a more detailed summary including general risks associated with geared investing.
Gearing magnifies losses as well as gains.
When your client acquires a Westpac SFI, they pay the Initial Interest Amount. On each Annual Interest Date, they automatically pay an Interest Amount through an increase in the Loan Amount, which is variable. The Initial Interest Amount is also variable and takes into account factors such as the volatility and liquidity of the Underlying Security, and the costs associated with Westpac's hedging arrangements in connection with Westpac SFIs. Read the Product Disclosure Statement for the interest definitions.
Clients may request to use the ‘Adviser Service Fee Facility’ as a simple way to pay fees to their financial adviser. Under the Adviser Service Fee Facility, they appoint Westpac and the nominee as their agents to pay to the adviser on behalf of the specified Adviser Service Fee amount. Westpac does not keep any portion of the Adviser Service Fee.
Adviser Service Fees can be paid as a single upfront payment and as periodic payments. The client must complete the instruction form in order to set up this facility.