Sequoia Alpha
Series 4

The Units in Alpha Series 4 offer investors the ability to gain 100% leveraged exposure to the performance the Morgan Stanley Diversified Risk Premia 4% Index (“the MS Diversified Risk Premia Index”). This index is a rules- based, quantitative strategy aiming to generate absolute returns by accessing risk premium themes across asset classes. The index tends to exhibit low correlation to traditional asset classes such as equities and bonds.

Summary of the key features

Morgan Stanley Diversified Risk Premia 4% Index

This index is a rules-based, quantitative strategy aiming to generate absolute returns by accessing risk premium themes across asset classes. The index tends to exhibit low correlation to traditional asset classes such as equities and bonds. The index comprises exposures such as carry, value, trend, volatility curve, intraday momentum and quality, which when combined can provide benefits from diversification. The underlying strategy allocations are rebalanced to a fixed weight on a monthly basis. Additionally, there is a 4% volatility target overlay (with 150% maximum exposure and 0.5% p.a. decrement fee) built into the index for efficient pricing.

Downloads

To find out more, and to download a copy of the Term Sheet PDS and Master PDS, please click on the links below

Key risks include:

• Risk of 100% loss in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. A 100% loss will occur if there are no Performance Coupons paid during the Investment Term. This will be the case if the Index Performance is less than or equal to zero on each of the Coupon Determination Dates;
• Risk of partial loss (i.e. less than 100% loss) in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. Investors may incur a partial loss if the Total Performance Coupons received during the Investment Term is less than the Break-Even Point (per Unit);
• Timing risks. The timing risk is significant. This is because the Investment Term is fixed and the Total Performance Coupons received during the Investment Term needs to exceed the Total Investment Cost by the time the Maturity Date arrives in order for the investor to generate a profit from their investment (ignoring any Upfront Adviser Fee and any external costs). If this does not occur by the Maturity Date then Investors will generate a loss;
• Volatility and exposure risk – the volatility control mechanism used by the Index means that if there is high volatility in the relevant underlying portfolio during the Investment Term there is a risk the Index will have little to no exposure to this portfolio during some or all of the Investment Term, which may provide some protection against decreases in the prices of the portfolio comprising the Index. However, it may also limit the Index’s (and the Units’) exposure to increases in the prices of the relevant portfolio comprising the Index. To the extent the Index has an exposure primarily to cash as a result of the volatility control mechanism, the Index will be unlikely to generate the Index Performance required for investors to generate a profit;
• There is no guarantee that the Units will generate returns in excess of the Prepaid Interest and Fees, during the Investment Term;
• Additionally, in the event of an Investor requested Issuer Buy-Back or Early Maturity Event, you will not receive a refund of your Prepaid Interest or Fees. The amount received will depend on the market value of the Units which will be determined by many factors before the Maturity Date including prevailing interest rates both in Australia and internationally, foreign exchange rates, the remaining time to Maturity, and general market risks and movements including the volatility of the Index. Investors should be aware the Units are designed to be held to Maturity and are not designed to be held as a trading instrument;
• Gains (and losses) may be magnified by the use of a 100% Loan. However, note that the Loan is a limited recourse loan, so you can never lose more than your Prepaid Interest Amount and Fees paid at Commencement;
• Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty; and
• The Units may mature early following an Early Maturity Event, including an Adjustment Event, Market Disruption Event or if the Issuer accepts your request for an Issuer Buy-Back.

Please refer to Section 2 “Risks” of the Master PDS for more information.

Units in Sequoia Alpha Series 4 are issued by Sequoia Specialist Investments Pty Ltd (ACN 145 459 936) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN 135 907 550, AFSL 341506) (the “Arranger”). Investments in the Sequoia Alpha Series 4 can only be made by completing an Application Form attached to the Term Sheet PDS, after reading the Term Sheet PDS dated 7 May 2024, the Master PDS dated 17 August 2017 and Target Market Determination (for retail investors) and submitting it to Sequoia. A copy of the Termsheet PDS, Master PDS and Target Market Determination can be obtained by contacting Sequoia Asset Management or contacting your financial adviser. You should consider the Term Sheet & Master PDS’s as well as the Target Market Determination before deciding whether to invest in Units in Sequoia Alpha Series 4. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS.