Target Market Determination – InvestSMART Professionally Managed Accounts
Legal disclaimer
This Target Market Determination
(TMD) is required under section 994B of the Corporations Act 2001 (Cth) (the Act). It sets out the class of
consumers for whom the product, including its key attributes, would likely be
consistent with their likely objectives, financial situation and needs. In
addition, the TMD outlines the triggers to review the target market and certain
other information. It forms part of InvestSMART Fund Management Ltd.’s design
and distribution arrangements for the product.
This document is not a
product disclosure statement and is not a summary of the product
features or terms of the product. This document does not take into
account any person’s individual objectives, financial situation or needs.
Persons interested in acquiring this product should carefully read the Product
Disclosure Statement, including the Investment Menu for the InvestSMART
Professionally Managed Accounts before making a decision whether to invest
through this product.
Important terms used in this TMD
are defined in the TMD Definitions which supplement this document. Capitalised
terms have the meaning given to them in the product’s PDS, unless otherwise
defined. The PDS can be obtained by downloading a copy from the
www.investsmart.com.au/invest-with-us.
This product is likely to be appropriate for an investor
seeking a high return over the long-term with a high degree of volatility in an
actively managed portfolio of ETFs, to be used as a satellite holding or core
holding for exposure to Australian equities within a portfolio where the
consumer has a longer-term investment timeframe and a high risk/return profile.
This product is not suitable for investors seeking a low
risk/low return or balanced risk/returns.
Fund and Issuer identifiers
Issuer
|
InvestSMART Funds Management Limited
|
Model
|
Australian Equities Portfolio
|
Issuer ABN
|
62 067 751 759
|
Date TMD approved
|
30 September 2021
|
Issuer AFSL
|
246441
|
TMD Version
|
1.0
|
ARSN
|
620 030 382
|
TMD status
|
current
|
Description of Target Market
This part is required under section 994B(5)(b) of the Act.
TMD indicator key
The Consumer Attributes for
which the product is likely to be appropriate have been assessed using a
red/amber/green rating methodology with appropriate colour coding:
In target market
|
Potentially in target market
|
Not considered in target market
|
Instructions
In the tables below, Column 1,
Consumer Attributes, indicates a description of the likely objectives,
financial situation and needs of the class of consumers that are considering
this product. Column 2, TMD indicator, indicates whether a customer meeting the
attribute in column 1 is likely to be in the target market for this product.
Generally, a consumer is unlikely
to be in the target market for the product if:
·
one or more of their Consumer Attributes correspond to a red rating, or
·
three or more of their Consumer Attributes correspond to
an amber rating.
Definitions
of terms are in the attachment or otherwise in the PDS.
Investment products and diversification
A consumer (or class of consumer) may intend to hold a
product or managed account as part of a diversified portfolio (typically with
an intended product use of satellite/small allocation or core
component). In such circumstances, the product or managed account should be
assessed against the consumer’s attributes for the relevant portion of the
portfolio, rather than the consumer’s portfolio as a whole. For example, a
consumer may seek to construct a conservative portfolio with a satellite/small
allocation to growth assets. In this case, it may be likely that a product or
managed account with a High or Very High risk/return profile is
consistent with the consumer’s objectives for that allocation notwithstanding
that the risk/return profile of the consumer as a whole is Low or Medium.
In making this assessment, distributors should consider all features of a
product (including its key attributes).
Consumer’s investment objective
|
TMD Indicator for product
|
Product description
including key attributes
|
Capital Growth
|
|
Investment
objective
InvestSMART
Professionally Managed Accounts Australian Equities Portfolio seeks to track
the average return of the S&P/ASX Accumulation Index, before taking into
account fees, expenses and tax.
Portfolio
overview
The Portfolio provides low-cost
access to a small number of ETFs and targets a 99% allocation to the Australian
equity asset class and a 1% allocation to cash.
|
Capital Preservation
|
|
Capital Guaranteed
|
|
Income Distribution
|
|
Consumer’s
intended product use (% of Investable Assets)
|
TMD Indicator for product
|
Product description
including key attributes
|
Solution/Standalone (75-100%)
|
|
The Portfolio is likely to be suitable as a satellite
solution or either as a core component allocation to Australian equities in
an investor’s portfolio.
The Portfolio has low diversification to asset
classes.
|
|
Core Component (25-75%)
|
|
Satellite/small allocation (<25%)
|
|
Consumer’s investment
timeframe
|
TMD Indicator for product
|
Product description
including key attributes
|
Short (≤ 2 years)
|
|
The minimum suggested timeframe for holding
investments in the Australian Equities Portfolio is 7+ years
.
|
|
Medium (> 2 years)
|
|
Long (> 8 years)
|
|
Consumer’s Risk (ability
to bear loss) and Return profile
|
TMD Indicator for product
|
Product description
including key attributes
|
Low
|
|
The Portfolio has Very High risk with an expected loss
in 6 or more years out of every 20 years.
|
Medium
|
|
High
|
|
Very High
|
|
Consumer’s need to
withdraw money
|
TMD Indicator for product
|
Product description
including key attributes
|
Daily
|
|
The product is
very liquid as it invests in liquid, high quality ETFs, as well as cash and
cash equivalent assets that are readily realisable.
Investors will normally be able to redeem the
Portfolio on any Business Day, with redemption proceeds available on T+3.
|
Weekly
|
|
Monthly
|
|
Quarterly
|
|
Annually or longer
|
|
Consumer’s Other
requirements
|
TMD Indicator for product
|
Product description
including key attributes
|
Individual tax management of investments
|
|
The product provides individual tax management of the
investments
|
Visibility / transparency of portfolio holdings
|
|
The portfolio holdings are disclosed immediately
|
Ability to customise portfolio or accommodate other
holdings
|
|
The product is not customisable and cannot accommodate
other holdings.
|
Ability to include in specie transfer of
existing investments
|
|
The investor can in specie holdings out of the
account at any time.
|
Appropriateness
Note: This section is required under RG 274.64–66
The Issuer has assessed the product and formed the view that
the product, including its key attributes, is likely to be consistent with the
likely objectives, financial situation and needs of consumers in the target
market as described below, as the attributes of this product in Column 3 of the
table above are likely to be suitable for consumers with the attributes identified
with a green TMD Indicator in Column 2.
Distribution conditions/restrictions
This part is required under section 994B(5)(c) of the Act.
Distribution Condition
|
Distribution Condition
Rationale
|
There are no distribution conditions
|
Not applicable
|
Review triggers
This part is required under
section 994B(5)(d) of the Act.
|
Material change to key attributes, fund investment
objective and/or fees.
|
Material deviation from benchmark / objective over
sustained period.
|
Key attributes have not performed as disclosed by a
material degree and for a material period.
|
Determination by the issuer of an ASIC reportable
Significant Dealing
|
Material or unexpectedly high number of complaints (as
defined in section 994A(1) of the Act) about the product or distribution
of the product.
|
The use of Product Intervention Powers, regulator orders
or directions that affects the product.
|
Mandatory review periods
This part is required under section 994B(5)(e) and (f) of the Act.
|
Review period
|
Maximum period for review
|
Initial review
|
1 year, 3 months
|
Subsequent review
|
3 years
|
Distributor reporting requirements
This part is required under section 994B(5)(g) and (h) of the Act.
|
Reporting requirement
|
Reporting period
|
Which distributors this
requirement applies to
|
Complaints (as defined in section 994A(1) of the Act)
relating to the product design, product availability and distribution. The
distributor should provide all the content of the complaint, having regard to
privacy.
|
Within 10 business days following end of calendar
quarter
|
All distributors
|
Significant dealing outside of target market, under
s994F(6) of the Act.
See Definitions for further detail.
|
As soon as practicable but no later than 10 business
days after distributor becomes aware of the significant dealing.
|
All distributors
|
To the extent a distributor is aware, dealings outside
the target market, including reason why acquisition is outside of target
market, and whether acquisition occurred under personal advice.
|
Within 10 business days following the end of calendar
quarter.
|
All distributors
|
If practicable, distributors should adopt the FSC data
standards for reports to the issuer. Distributors must report to InvestSMART by
email to support@investsmart.com.au. This email address also provides contact
details relating to this TMD for InvestSMART.
Disclaimer
Issued by InvestSMART Funds Management Limited ABN 62 067
751 759 AFSL 246441 (Issuer). Issuer is the responsible entity and
issuer of units in the managed investment scheme referred to in this material. This material provides general information only and does not take
into account your individual objectives, financial situation, needs or
circumstances. Before making any investment decision, you should assess whether
the material is appropriate for you and obtain financial advice tailored to you
having regard to your individual objectives, financial situation, needs and
circumstances. This material is not a financial product recommendation or an
offer or solicitation with respect to the purchase or sale of any financial
product in any jurisdiction. This material is not intended for distribution to,
or use by, any person or entity in any jurisdiction or country where such
distribution or use would be contrary to local law or regulation.
Definitions
Term
|
Definition
|
Consumer’s investment
objective
|
Capital Growth
|
The consumer seeks to invest in a product designed to generate
capital return. The consumer prefers exposure to growth assets (such as
shares or property) or otherwise seeks an investment return above the current
inflation rate.
|
Capital Preservation
|
The consumer seeks to invest in a product to reduce
volatility and minimise loss in a market down-turn. The consumer prefers exposure
to defensive assets (such as cash or fixed income securities) that are generally
lower in risk and less volatile than growth investments.
|
Capital Guaranteed
|
The consumer seeks a guarantee or protection against
capital loss whilst still seeking the potential for capital growth (typically
gained through a derivative arrangement). The consumer would likely
understand the complexities, conditions and risks that are associated with
such products.
|
Income Distribution
|
The consumer seeks to invest in a product designed to distribute
regular and/or tax-effective income. The consumer prefers exposure to income-generating
assets (typically, high dividend-yielding equities, fixed income securities
and money market instruments).
|
Consumer’s intended
product use (% of Investable Assets)
|
Solution/Standalone (75-100%)
|
The consumer intends to hold the investment as either
a part or the majority (up to 100%) of their total investable assets (see
definition below). The consumer typically prefers exposure to a product with
at least High portfolio diversification (see definitions below).
|
Core Component (25-75%)
|
The consumer intends to hold the investment as a major
component, up to 75%, of their total investable assets (see definition
below). The consumer typically prefers exposure to a product with at least
Medium portfolio diversification (see definitions below).
|
Satellite (<25%)
|
The consumer intends to hold the investment as a
smaller part of their total portfolio, as an indication it would be suitable
for up to 25% of the total investable assets (see definition below).
The consumer is likely to be comfortable with exposure to a product with Low portfolio
diversification (see definitions below).
|
Investable Assets
|
Those assets that the investor has available for
investment, excluding the family home.
|
Portfolio diversification
(for completing the key product attribute section of consumer’s intended
product use)
|
Low
|
Single asset class, single country, low or moderate holdings
of securities - e.g. high conviction Aussie equities.
|
Medium
|
1-2 asset classes, single country, broad exposure
within asset class, e.g. Aussie equities “All Ords”.
|
High
|
Highly diversified across either asset classes,
countries or investment managers, e.g. Australian multi-manager balanced fund
or global multi-asset product (or global equities).
|
Consumer’s intended
investment timeframe
|
Short (≤ 2 years)
|
The consumer has a short investment timeframe and may
wish to redeem within two years.
|
Medium (> 2 years)
|
The consumer has a medium investment timeframe and is
unlikely to redeem within two years.
|
Long (> 8 years)
|
The consumer has a long investment timeframe and is unlikely
to redeem within eight years.
|
Consumer’s Risk (ability
to bear loss) and Return profile
|
Issuers should undertake a comprehensive risk assessment
for each product. The FSC strongly recommends adoption of the Standard Risk
Measure (SRM) to calculate the likely number of negative annual
returns over a 20 year period, using the guidance and methodology outlined in
the Standard Risk Measure Guidance Paper For Trustees.
SRM is not a complete assessment of risk and potential loss. For example, it
does not detail important issues such as the potential size of a negative
return or that a positive return could still be less than a consumer requires
to meet their investment objectives/needs. Issuers may wish to supplement the
SRM methodology by also considering other risk factors. For example, some
products may use leverage, derivatives or short selling, may have liquidity
or withdrawal limitations, or otherwise may have a complex structure or
increased investment risks, which should be documented together with the
SRM to substantiate the product risk rating.
A consumer’s desired product return profile would
generally take into account the impact of fees, costs and taxes.
|
Low
|
The consumer is conservative
or low risk in nature, seeks to minimise potential losses (e.g. has the
ability to bear up to 1 negative return over a 20 year period (SRM 1 to 2))
and is comfortable with a low target return profile.
Consumer typically prefers
defensive assets such as cash and fixed income.
|
Medium
|
The consumer is moderate or
medium risk in nature, seeking to minimise potential losses (e.g. has the
ability to bear up to 4 negative returns over a 20 year period (SRM 3 to 5))
and comfortable with a moderate target return profile.
Consumer typically prefers a
balance of growth assets such as shares, property and alternative assets and
defensive assets such as cash and fixed income.
|
High
|
The consumer is higher risk in
nature and can accept higher potential losses (e.g. has the ability to bear
up to 6 negative returns over a 20 year period (SRM 6)) in order to target a
higher target return profile.
Consumer typically prefers
predominantly growth assets such as shares, property and alternative assets
with only a smaller or moderate holding in defensive assets such as cash and
fixed income.
|
Very high
|
The consumer has a more
aggressive or very high risk appetite, seeks to maximise returns and can
accept higher potential losses (e.g. has the ability to bear 6 or more
negative returns over a 20 year period (SRM 7) and possibly other risk
factors, such as leverage).
Consumer typically prefers
growth assets such as shares, property and alternative assets.
|
Consumer’s need to withdraw
money
|
Issuers should consider in the first instance the
redemption request frequency under ordinary circumstances. However, the
redemption request frequency is not the only consideration when determining
the ability to meet the investor’s requirement to access capital. To the
extent that the liquidity of the underlying investments or possible liquidity
constraints (e.g. ability to stagger or delay redemptions) could impact this,
this is to be taken into consideration in completing this section.
|
Daily/Weekly/Monthly/Quarterly/
Annually or longer
|
The consumer seeks to invest in a product which
permits redemption requests at this frequency under ordinary circumstances
and the issuer is typically able to meet that request within a reasonable
period.
|
Consumer’s Other
requirements
|
Individual tax management of investments
|
The customer is seeking a product that provides the
ability to actively manage the consumer’s tax position in the recommendations
which are made to them
|
Visibility / transparency of portfolio holdings
|
The consumer is seeking a product that provides a
clear understanding of the constituents in their portfolio.
|
Ability to customise portfolio or accommodate other
holdings
|
The consumer requires the ability to specifically
include, exclude or manage specific investments or classes of investment for
particular reasons, such as ESG considerations, or because they have existing
holdings which need to be accommodated in portfolio design.
|
Ability to include in specie transfer of
existing investments
|
The consumer has existing holdings which they expect
to be incorporated into their portfolio and where ownership is to carry on,
subject to subsequent portfolio management considerations. This may be for
tax, transaction cost or other reasons.
|
Distributor Reporting
|
Significant dealings
|
Section 994F(6) of the Act requires distributors to
notify the issuer if they become aware of a significant dealing in the
product that is not consistent with the TMD. Neither the Act nor ASIC defines
when a dealing is ‘significant’ and distributors have discretion to apply its
ordinary meaning.
The issuer will rely on notifications of significant
dealings to monitor and review the product, this TMD, and its distribution
strategy, and to meet its own obligation to report significant dealings to
ASIC.
Dealings outside this TMD may be significant because:
·
they represent a material
proportion of the overall distribution conduct carried out by the distributor
in relation to the product, or
·
they constitute an individual
transaction which has resulted in, or will or is likely to result in,
significant detriment to the consumer (or class of consumer).
In each case, the distributor should have regard to:
·
the nature and risk profile of
the product (which may be indicated by the product’s risk rating or
withdrawal timeframes),
·
the actual or potential harm to
a consumer (which may be indicated by the value of the consumer’s investment,
their intended product use or their ability to bear loss), and
·
the nature and extent of the
inconsistency of distribution with the TMD (which may be indicated by the
number of red or amber ratings attributed to the consumer).
Objectively, a distributor may consider a
dealing (or group of dealings) outside the TMD to be significant if:
·
it constitutes more than half of the distributor’s total retail
product distribution conduct in relation to the product over the reporting
period,
·
the consumer’s intended product use is Solution / Standalone,
or
·
the consumer’s intended product use is Core component
and the consumer’s risk (ability to bear loss) and return profile is Low.
|