Issuer

InvestSMART Funds Management Limited

Model

Balanced 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

Consumer’s investment objective

TMD Indicator for product

Product description including key attributes

Capital Growth

Investment objective

InvestSMART Professionally Managed Accounts Balanced Portfolio seeks to track the average return of the Morningstar Australia Balanced Target Allocation NR AUD Index, before taking into account fees, expenses and tax.

Portfolio overview

The Portfolio provides low-cost access to a range of ETFs, offering broad diversification across multiple asset classes. The Balanced Portfolio is designed for investors seeking a low weighting to income and higher weighting to capital growth assets. The Portfolio targets a 50% allocation to income asset classes and a 50% allocation to growth asset classes.

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%)

Core Component (25-75%)

Satellite/small allocation (<25%)

Consumer’s investment timeframe

TMD Indicator for product

Product description including key attributes

Short (≤ 2 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 Medium risk profile with an expected loss in 3 to 4 years out of every 20 years.

The Portfolio aims to track the returns of the Morningstar Australia Balanced Target Allocation NR AUD Index before fees.

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.

Distribution Condition

Distribution Condition Rationale

There are no distribution conditions

Not applicable

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

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.