UBS Rolling Self Funding Instalments

Invest in leading Australian companies with a limited recourse loan facility "self-funded" by dividend payments

UBS Rolling SFIs allow you to buy ASX listed shares in two payments or instalments. You will enjoy shareholder benefits of capital growth, dividends and franking credits (if applicable)1, whilst only paying a fraction of the share price upfront.

This is possible because UBS Rolling SFIs provide gearing through a simple limited recourse loan. Investors are not obligated to pay the Completion Payment at maturity, unless they elect to receive the underlying shares. There is also no risk of margin calls during the term. These features make UBS Rolling SFIs an eligible investment for Self Managed Super Funds (“SMSFs”)2.

During the term of the UBS Rolling SFIs, interest and protection costs are added to the loan (i.e. capitalised) on each Annual Interest Date whilst dividends paid on the underlying shares are used to reduce the loan balance. As such, investors are not required to contribute additional cash to pay interest or protection cost while they hold UBS Rolling SFIs3.


Strategies for using UBS Rolling SFIs

  1. Gear your share portfolio – pay only part of the share purchase price upfront, with no need to make a separate loan application.
  2. UBS Rolling SFIs are one of the few gearing strategies that SMSFs are permitted to use4.
  3. Potential to use franking credits to reduce contributions tax within your SMSF5 .
  4. Diversification – for the same initial cash outlay, acquire exposure to more / different shares.
  5. Roll over a margin loan – eliminate the risk of margin calls by replacing a margin loan with a limited recourse loan provided with UBS Rolling SFIs.
  6. Potential to unlock capital from existing shareholdings without triggering a CGT event by making a Shareholder Application (not available for SMSFs).

Key risks to consider

  • Gearing will accelerate losses as well as gains. The higher the gearing level the more pronounced this effect is.
  • You are exposed to changes in the underlying share price and your UBS Rolling SFI will have a zero value if the price of the underlying parcel is less than the loan amount at maturity.
  • Interest and protection costs may increase over time, thus increasing the loan amount and reducing the value of your UBS Rolling SFI.
  • Dividends may be lower than expected, which means the Loan Amount will be higher than expected.

A more detailed discussion on the risks of investing in UBS Rolling SFIs is set out in Part 3 of the PDS (“Risks”).


How to purchase UBS Rolling SFIs

  • Buy UBS Rolling SFIs on ASX through a full service or online broker.
  • Cash Applicants – complete the Application Form in the PDS and pay the First Payment amount to UBS.
  • Shareholder Applicants – complete the Application Form in the PDS and deliver the underlying shares to UBS to receive the cash back amount.
  • Rollover Applicants – complete the Application Form in the PDS and deliver the existing instalments to UBS and receive the cash back amount or pay a rollover payment.

 

For more information on UBS Rolling SFIs, you can refer to the UBS Rolling SFI Brochure or contact us on 1800 633 100. Before you invest, you should download and read the PDS and Supplementary PDS.


1 Subject to individual circumstances. Read Part 5 of the PDS ("Taxation Summary") for further information
2 This assumes the SMSF acquires the UBS Rolling SFIs on the ASX or as a Cash Applicant
3 Assuming the investor has provided their TFN / ABN or is able to rely on the other relevant exemptions
4 This assumes the SMSF acquires the UBS Rolling SFIs on  the ASX or as a Cash Applicant
5 Subject to individual circumstances. Read Part 5 of the PDS ("Taxation Summary") for further information