Global Dispersion – Series 3
The Units in Global Dispersion – Series 3 offer investors the ability to gain exposure to the Dispersion of a Reference Basket of listed Global Shares during the period from the Commencement Date to the Maturity Date (being a period of approximately 2 years) based on the full leveraged Investment Amount. Investment in the Units is by way of a 100% LVR limited recourse loan, with Investors only being required to pay an Application Fee and Prepaid Interest following a successful application for Units.
The Reference Basket consists of 10 listed Global Shares with a potential exposure to possible sources of future dispersion such as:
- US-China Trade Tensions;
- China Economic Slowdown;
- Growing regulatory risks facing US tech giants
- Inflation rising globally
The Units provide investors with a potential uncapped Performance Coupon at Maturity based on the full leveraged investment amount depending on the performance of Dispersion of the Reference Basket during the Investment Term provided the realised level of Dispersion at Maturity is greater than the Hurdle. The Performance Coupon is also adjusted for changes in the AUD/USD exchange rate during the Investment Term.
- Reference Basket
- Potential Performance Coupons
- Currency Exposure
- Limited recourse Loan
- Annual Interest Rate on Loan (payable for the full 2 years in advance)
- Application Fee
- Total Investment Cost for the full 2 year period
- Break- Even Level Performance Coupon at Maturity
- Margin Calls
- SMSF Eligibility
Share Bloomberg Code
CMCSA UW Equity
Societe Generale SA
GLE FP Equity
Banco Santander SA
SAN SQ Equity
Royal Bank of Scotland Group PLC
RBS LN Equity
NFLX UW Equity
DAI GY Equity
Honeywell International Inc
HON UN Equity
Taiwan Semiconductor Manufacturing Co Ltd
TSM UN Equity
QCOM UW Equity
AAPL UW Equity
The dispersion of a basket of securities is typically measured by how much the return of each individual security in the basket differs, in absolute terms from the average return of the overall basket over a given period of time. Each of these return differentials are averaged and the greater the average, the higher the measure of dispersion.
Refer to the Formulae & Calculations section of the IM for a precise formula for calculating Dispersion.
- Yes, the potential for one uncapped Performance Coupon based on the realised level of Dispersion at Maturity LESS the Hurdle, as adjusted for changes in the AUD/USD exchange rate.
- The Hurdle is determined by the Issuer on the Commencement Date. As at the date of the IM the Hurdle would be 25%. The Issuer will not proceed with the issue of Units if the Hurdle cannot be set at or below 25% on the Commencement Date.
- Yes. The potential Performance Coupon at Maturity is adjusted for changes in the AUD/USD exchange rate during the Investment Term.
- 2.95% p.a. (5.9% payable upfront for the full 2-year Investment Term)
Global Dispersion – Series 3 Performance
|Date||Reference asset (Realized dispersion)||Indicative Unit value 1||Gross Performance 2|
1 – Unit Value: Investors please note this is a theoretical investment maturity value. This investment is designed to be held to maturity. Any investors seeking to redeem prior to maturity may receive an amount significantly different to the Indicative Unit Value stated
2 – Gross Performance only becomes positive once the reference asset performance level exceeds the hurdle level of 25%
Key risks include:
- Your return (including any Coupon) is affected by the performance of the Dispersion of Reference Basket (US listed Shares) and whether this is greater than the Hurdle at Maturity. There is no guarantee that the Dispersion of the Reference Basket will perform well.
- There will be no Performance Coupons payable if the Dispersion of the Reference Basket is below the Hurdle at Maturity.
- The potential Performance Coupon is determined by reference to the Dispersion of the Reference Basket, the Hurdle as well as changes in the AUD/USD exchange rate. An increase in the AUD/USD exchange rate between the Commencement Date and the Maturity Date will reduce the Performance Coupon whilst a decrease in the AUD/USD rate between the relevant dates will lead to an increase in the Performance Coupon;
- 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 an Early Maturity Event you will not receive a refund of your Prepaid Interest or Fees.
- 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 will never be required to pay more than the Prepaid Interest Amount and Fees at Commencement.
- Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty;
- Gains and losses may be magnified by the use of a 100% limited recourse Loan; 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 IM for more information. Please refer to Section 2 “Risks” of the Master IM for more information.
Units in Global Dispersion – Series 3 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 Dispersion – Series 3 can only be made by completing an Application Form attached to the Term Sheet Information Memorandum (“TSIM”), after reading the Term Sheet IM dated 21 February 2020 and the Master IM dated 11 April 2019 and submitting it to Sequoia. A copy of the IM can be obtained by contacting Sequoia Wealth Management on 02 8114 2222 or contacting your financial adviser. You should consider the Term Sheet & Master IM before deciding whether to invest in Units in Global Dispersion – Series 2 . Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master IM.