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FAQs

Yes, you can easily switch between investment models and yes you can hold more than one investment model in the same account.

To switch between investment models you will need to complete a model allocation form. You will find the model allocation form within the InvestSMART Funds section of the Portfolio Manager. Complete this form and email it to invest@investsmart.com.au. There are no administration fees for changing between models. The only costs associated would be the brokerage charges for selling and buying the new holdings. 

You can hold as many investment models in the same account as you like. If the model is part of our capped fee range the management fee will apply to your account as a whole. For example if you hold the InvestSMART Balanced Portfolio and the InvestSMART International Portfolio you will only pay a maximum of $451pa on your portfolio and not $451 per model.

 

Yes. Investors have legal ownership of the shares and they are held on a HIN (holder identification number) registered with CHESS in the investors name.

Should you wish to withdraw your investment with InvestSMART you can transfer your shares out to a brokerage account of your choice. 

Yes, your InvestSMART PMA will receive dividends from the holdings. InvestSMART does not participate in dividend reinvestment plans. As the dividends from your holdings are paid they will go into the cash component of your account. You will see these via the Dividends & Interest tab and Deposits & Withdrawals tab within the InvestSMART Funds section of the Portfolio Manager.

Clients can elect to have the dividends paid out in a monthly income sweep. At the end of each month all dividends and interest received by your account will be tallied and paid out to the bank account you nominated in your application form.

If you do not have an income sweep in place the dividends will remain as cash and invested when your portfolios cash percentage exceeds the investment models.

Yes. You will receive a comprehensive tax statement at the end of financial year and you will receive the franking you're entitled to once you submit your tax return.

Hybrid securities can be an attractive investment proposition, offering relatively stable income streams and lower levels of volatility when compared to equities. However, many hybrids are often more complicated than they seem and identifying which are appropriately priced is not always a simple task.

What are hybrids?

Hybrid securities are financial instruments that have both equity and debt features, and have been a key part of the Australian stock market retail product offering for many years.

The term ‘hybrids’ effectively covers any interest-bearing security that has both debt-like and equity-like features embedded in it. Some hybrids (like those issued by the banks) take this dual nature all the way to the possibility of conversion into the ordinary shares: others (like some corporate hybrids) only have equity-style features, such as the ability to defer interest payments without triggering a default.

Repayment of the investor’s principal can be in the form of cash or ordinary shares of the issuer. Although they are part of the Australian Securities Exchange’s (ASX’s) listed interest-bearing security – or listed credit – sector, the hybrids are a discrete group of investments because of their equity-like features.

Hybrid securities’ distributions (or dividends) can be franked or unfranked. They are typically unsecured, ranking just above ordinary equity. Hybrids are technically perpetual securities, meaning that they may never be redeemed, and an investor may never have their invested capital returned.

 

Key Features of Hybrids

When a hybrid is issued, investors know the following:

  • the face value – the price at which the security is issued and the amount the investor will receive at maturity/redemption by the issuer;
  • the coupon – the distribution/dividend return investors receive each year for holding the security, paid either quarterly or semi-annually;
  • the maturity/redemption date – the date at which holders will be repaid the face value of the security in cash; and
  • the conversion date – the date when a preference share or other convertible security will convert into ordinary shares in the issuer (assuming the required conversion conditions are met).

 

Why invest in hybrids?

For investors, hybrids promise regular interest payments at rates usually several percentage points higher than those paid on bank term deposits or ‘vanilla’ corporate bonds; while the potential equity convertibility is a more conservative way of holding exposure to a company.

 

What is the InvestSMART Hybrid Income Portfolio?

The InvestSMART Hybrid Income Portfolio is a professionally managed portfolio that gives you access to a hand-picked selection of 10 to 25 hybrids to diversify your income stream, with the added benefit of minimised portfolio risk. 

Our Hybrid Income Portfolio has been designed to deliver a regular income stream with lower levels of volatility.

The Portfolio’s objective is to to achieve a return of 3% (including franking credits) above the RBA Cash rate per annum over three year rolling periods.

 

The main benefits of the InvestSMART Hybrid Income Portfolio include:

  • Lower risk than ordinary shares and a higher return than cash and cash like investments
  • Diversification across 10–25 securities to minimise portfolio risk
  • Professionally managed by our investment team, with active monitoring and rebalancing
  • Low trading costs for rebalances (<0.05%)

 

More information on investing in hybrids:

InvestSMART Hybrid Income Portfolio

Launching InvestSMART's Hybrid Income

Investing in Hybrids for Income

An investor's guide to hybrid securities

 

 

 

 

You will be able to see your portfolio via the InvestSMART Portfolio Manager. Clients are able to see all holdings, the cost base, dividends and interest, fees, all transactions and deposits and withdrawals.

You are also able to include in the Portfolio Manager any investments you have outside of InvestSMART so you can have a neat overview of your total investments. The team can help you set this up.