Sequoia Future Tech – Series 2
The Units in Sequoia Future Tech – Series 2 offer investors the ability to gain 100% leveraged exposure to the US listed ETFMG Prime Mobile Payments ETF (”the Reference Asset”) with a 15.0% Volatility Target Mechanism (the “Strategy”) over a 3 year period. The Units have the potential to pay annual Performance Coupons of up to 10.8% at end of Year 1 and Year 2 and an uncapped Final Performance Coupon at Maturity dependant on the performance of the Strategy Value as adjusted for movements in the AUD/USD exchange rate.
US listed ETFMG Prime Mobile Payments ETF (“IPAY”)
IPAY is a US listed exchange traded fund that seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index5 (“Index”). The Index is designed to measure the performance of companies engaged in the mobile and electronic payments industry.
For more details in relation to IPAY please refer to the following link:
For more details in relation to the Index which IPAY seeks to track, please refer to the following link:
A summary of the key features are as follows
- Reference Asset / Index
- Currency Exposure
- The Potential for 3 Performance Coupons
- Limited recourse Loan
- Interest Rate on Loan
- Risk Management Fee
- Application Fee
- Margin Calls
- Volatility Mechanism
- Volatility Target
- Maximum Participation Rate
- Total Investment Cost
- SMSF Eligibility
- ETFMG Prime Mobile Payments ETF ( Ticker: IPAY)
- Reference Asset with 15.0% Volatility Target
- USD unhedged. The Reference Asset is denominated in USD and this currency exposure is unhedged.
- Two potential Performance Coupons of up to 10.8%* each, at the end of Year 1 & Year 2 plus the potential for an uncapped Final Coupon subject to changes in the AUD/USD exchange rate
- Yes. Investors borrow 100% of the Investment Amount.
- 5.95% p.a. payable for the full 3 years upfront
- 0.70% p.a. payable for the full 3 years upfront
- 22.15% payable upfront
* as reduced by a 10% Performance Fee
3 July 2019
First Coupon: 1 July 2020
Second Coupon: 1 July 2021
Final Coupon: 1 July 2022
Performance Coupon (%)
Sequoia Future Tech – Series 2 Performance
|Date||Reference Asset Value||Indicative Unit Value*||Gross Performance|
* 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 recieve an amount significantly different to the Indicative Unit Value stated
Key risks include:
- Your return (including any Coupon) is affected by the performance of the Reference Asset. There is no guarantee that the Reference Asset will perform well.
- The Units have varying levels of exposure to the Reference Asset depending on volatility due to the variable Participation Rate. It operates by varying the exposure that the Units will have to the Reference Asset depending on the Realised Volatility of the Reference Asset and the Target Volatility. There is the risk that the Participation Rate could drop below 100% during the Investment Term in which case Investors will not gain the full benefits of an increase of the value of the Reference Asset.
- Investors should note that there is a lag in measuring the Realised Volatility of the Reference Asset. This means that where there has been a period of high Realised Volatility, the Investor’s exposure to the Reference Asset will be low, regardless of whether the Reference Asset is performing positively or negatively.
- The two potential Performance Coupons and the Final Coupon are determined by reference to the Initial Strategy Value, the Strategy Value on the relevant Coupon Determination Dates and the Final Strategy Value as well as changes in the AUD exchange rate. An increase in the AUD/USD exchange rate between the relevant dates will reduce the Performance Coupons and Final Coupon whilst a decrease in the AUD/USD rate between the relevant dates will lead to an increase in the Performance Coupons and Final Coupon;
- The Initial Strategy Value and Final Strategy Value are subject to averaging. Averaging may decrease the impact of an increase in the Reference Asset during the Investment Term.
- There will be no Performance Coupon payable if the performance of the Strategy Value is negative at a Coupon Determination Date.
- There is no guarantee that the Units will generate returns in excess of the Prepaid Interest, Risk Management Fee and other Fees, during the Investment Term. Additionally, in the event of an Investor requested Issuer Buy-Back, 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 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 4 “Key Risks” of the Term Sheet PDS and Section 2 “Risks” of the Master PDS for more information.
Units in Sequoia Future Tech – Series 2 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 Future Tech – Series 2 can only be made by completing an Application Form attached to the Term Sheet Product Disclosure Statement (“TSPDS”), after reading the Term Sheet PDS dated 20 May 2019 and the Master PDS dated 14 August 2017 and submitting it to the Issuer. A copy of the PDS can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master PDS’ before deciding whether to invest in Units in Sequoia Future Tech – Series 2. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS