The Units in Sequoia Optimiser – Series 1

The Units in Sequoia Optimiser – Series 1

The Units in Sequoia Optimiser Series 1 is designed to offer investors the ability to gain exposure to the US stock market as measured by the S&P 500 Index (“Reference Asset”) with a 13% Volatility Target mechanism over a 2 year term and the potential to receive an uncapped Performance Coupon at Maturity dependent on the Strategy Value Performance.

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. Created in 1957, the S&P 500 was the first U.S. market cap weighted stock market index. This world-renowned index includes 500 of the top companies in leading industries of the U.S. economy and covers approximately 80% of available market capitalization.1

Key Features

Features
  • Reference Basket
  • Strategy
  • Currency Exposure
  • Optimized Entry Feature
  • Potential Performance Coupon
  • Limited recourse Loan
  • Investment Term
  • Annual Interest Rate on Loan (payable for the full 2 years in advance)
  • Application Fee
  • Total Investment Cost (payable upfront)
  • Volatility Mechanism
  • Volatility Target
  • Maximum Participation Rate
  • Performance Fee
  • Margin Calls
  • SMSF Eligibility
Series 1
  • S&P 500 Index
  • Reference Asset with 13% Volatility Target
  • USD
  • Yes
  • Yes, potential uncapped Performance Coupon* at Maturity subject to changes in the AUD/USD exchange rate
  • Yes
  • 2 Years
  • 5.95% p.a.
  • 1.65%
  • 13.55%
  • Yes
  • 13%
  • 100%
  • Yes
  • No
  • Yes

Optimized Entry Feature

Series 1 includes an Optimized Entry feature which enables the investor to benefit from a lower starting level for their investment in the event of a pullback in the US share market as measured by the S&P 500 with a 13% Volatility Target during the first 6 months of the investment term.

The reason the Issuer has decided to include this feature is because the Issuer believes a risk does exist that a short-term market correction in the S&P 500 could occur during 2020 before a possible rebound into 2022. Whilst there is absolutely no assurance that such a market scenario will actually unfold, Series 1 enables investors to optimize the entry point for their investment in such a case.

This is achieved by observing the Strategy Value at the end of each month during the first 6 months of the investment term and choosing the lowest of the 7 observed values as the Initial Strategy Value.  The Initial Strategy Value is then used as the starting point for calculating the Performance Coupon payable at Maturity.

Downloads

Initial Strategy Value

Initial entry – Observation Dates

31 March 2020

30 April 2020

31 May 2020

30 June 2020

31 July 2020

31 August 2020

30 September 2020

Initial Strategy Value

Strategy Value

100

101.87

102.66

102.98

TBA

TBA

TBA

TBA

Optimiser Series 1 Performance

DateReference Asset LevelIndicative Unit Value*Performance
30-Apr-2020101.87$1.021.87%
31-May-20102.66$1.02662.66%
30-Jun-20102.98$1.032.98%

* 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

Key risks include:

  • Your return (including any Coupons) is affected by the performance of the Reference Asset (S&P500). 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 to significantly 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
  • There will be no Performance Coupon payable if the Strategy Value Performance is negative on the Maturity Date.
  • The Performance Coupon is determined by reference to the Initial Strategy Value and Final Strategy Value at Maturity as well as changes in the AUD/USD exchange rate. An increase in the AUD/USD exchange rate will decrease the Performance Coupon whilst a fall in the AUD/USD exchange rate will increase 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 PDS for more information
The Sequoia Optimiser Series 1 are issued by Sequoia Specialist Investments Pty Ltd (ACN ) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN , AFSL 341506)(the “Arranger”). Investments in The Sequoia Optimiser Series 1 can only be made by completing an Application Form attached to the Term Sheet Product Disclosure Statement (“TSPDS”), after reading the Master PDS dated 14 August 2017 and submitting it to Sequoia. 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 The Sequoia Optimiser Series 1 . Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS..