Wholesale Masti Case Study
Many advisers have clients who are classified as wholesale/sophisticated investors and prefer using the Instreet Masti Wholesale version for business efficiency reasons.
John, an adviser, wants to recommend to his wholesale/sophisticated clients an exposure to a basket of broad US Technology, Biotechnology and Cybersecurity stocks. This allows his clients to obtain a material exposure to growth assets, knowing upfront the worst-case outcome and the maximum potential loss.
Strategy
John recommends to his wholesale clients to invest $37,750 to gain $500,000 exposure to a basket broad US Technology, Biotechnology and Cybersecurity stocks.
During the term clients receive two coupons of $20,000 p.a.
In a worst-case scenario and the reference index falls or remains flat, Masti will still pay the two fixed coupons, but would not pay a final coupon. In this scenario, the losses would be limited to the fees and finance cost paid, net of the coupons received (in this example, this would total $63,250 over the 3 year term, which includes years 2 & 3 finance cost payments).
John as the adviser has relied on his sign off that the client is a sophisticated/wholesale client rather than an accountant signoff.
Outcomes
The client and the adviser have saved valuable time due to the much simpler compliance and application process that is open to wholesale investors and John has been able to invest his wholesale/sophisticated clients into Masti.
The clients overall asset allocation has been diversified across 3 sectors.
In the Information Memorandum for Masti there is no tax sign off but although investors cannot rely on the ATO product ruling the product ruling does outline how the ATO may view this investment.
Wholesale clients don’t fall under the same regime as retail investors. As such fees can be negotiated directly with the client and still could be added into the financing costs, adding valuable benefits to both adviser and clients.
Masti wholesale is very flexible and the adviser can choose the underlying market which can vary form and index to a basket of stocks or ETFs.
ASIC also has clarified the definition of when a SMSF can be treated as wholesale/sophisticated investor
Important Information
Purpose of Document: The purpose of this Document is to provide indicative commercial terms only. The Documents commercial results are based on assumptions that may not be realistic. They are indicative only. Markets and market assumptions can change from the time and the commencement date of the Instreet Masti DPA product. Due care and attention have been used in the preparation of this document. However, actual results may vary and any variation may be materially positive or negative.
Document: This Document has been prepared by Instreet Investment Australia Limited ABN 24 622 827 589 (Instreet), a corporate authorised representative of AFSL 434776, and is current as at 12 August 2021.
Issuer and PDS: The Instreet Masti product is issued by Instreet Structured Investment Pty Ltd ACN 140 407 558 and the issue is arranged by Instreet. Instreet Masti is offered in a product disclosure (PDS) or Information Memorandum (IM). The relevant PDS or IM is available from Level 11, 2 Bulletin Place, Sydney, at the website www.instreet.com.au or by phoning 1300 954 678. In deciding whether to acquire or continue to hold and investment investors must first obtain the PDS and IM and carefully consider its contents.
General advice warning: The information contained in this Document is general in nature only. It has been prepared without taking account any potential investors’ personal financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. Advisers must form their own views on whether the Instreet Masti is appropriate after considering their clients’ objectives, financial situation and personal needs. We recommend you seek your own legal and taxation advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Website to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.
However, actual results will vary and any variation may be materially positive or negative.
No responsibility or liability is accepted by Instreet or any third party who has contributed to this document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.
Past performance: Past performance is not a reliable indicator of future performance.