Who is this for?
Westpac BlueChip20 may be suitable for clients who want to invest regularly in the share market, but are put off by the high entry costs and uncertainty of which shares to buy. Investors can start with a minimum initial investment of just $2,500, with equal or similar amounts added to the investment from a margin loan. A minimum monthly contribution of $250/month is required.
To be eligible for a margin loan, the applicant must be:
- an individual or joint individuals, who are over 18 years of age and an Australian resident for tax purposes; or
- an Australian company; or
- an Australian company or individual trustee of a family, discretionary or testamentary trust. Charitable, estate, unit trusts and Self Managed Super Funds (SMSFs) are not eligible for BT Margin Lending.
Under the Corporations Act BT Margin Lending must conduct an unsuitability assessment of each retail applicant for a BT Margin Loan.
Key benefits for your client
Build up month to month
Your client can build up their investment gradually with monthly contributions ($250 minimum). An equal or similar amount will continue to be added from the margin loan.
Save on brokerage costs
Clients can save on the fees associated with buying shares on a monthly basis in 20 different companies. Westpac BlueChip20 charges a maximum brokerage fee of just 0.05% (plus GST).
Use dividends to cover interest
With a geared investment, your client has the potential to magnify their dividend payments. These can be used to offset the interest on the loan (which may also be tax deductible).
24/7 online access
Westpac BlueChip20 gives your client online access to your portfolio details which are updated daily at the close of trading. Investors can check the performance of their portfolio, loan balance, dividend payments, cash and trading activity at anytime.
Unlike most other managed investment schemes, your client’s tax position is affected only by the activity within their own BlueChip20 holding, so they don’t inherit other investor’s capital gains. Interest and fees may be tax deductible and many of the companies pay fully franked dividends.
- General risks: Your client could receive back less than they initially invested and there is no guarantee that they will receive any income.
- Regulatory risk: A government or regulator may affect the value of securities that a Model Portfolio invests in, by introducing regulatory or tax changes.
- Market risk: Economic, technological, political or legislative conditions and even shifting market sentiment can affect the value of the investments in a model portfolio.
- Derivative risk: An investment in derivatives can cause a model portfolio to make gains or incur losses. Derivative transactions may also involve the risk (including credit risk) that the counterparty on a transaction will be unable to honour its financial obligation to the SMA.
- Scheme risk: There are risks particular to investing in the SMA including that the SMA could be terminated, fees and charges could change, Westpac could be replaced as responsible entity, model portfolio managers may be changed and model portfolios could be closed or change.
- Portfolio investment risk: While securities can offer higher returns than other asset classes, they are volatile and can perform poorly in the short to medium term. The model portfolio in Westpac BlueChip20 has exposure to securities.
- Operational risks: Investors in the SMA are subject to certain operational risks that are inherent in the administration of the SMA such as processing errors and systems or technology failure, which may affect the value of the account.
What are the fees and charges?
Interest on the margin loan
BT Margin Lending offers both variable and fixed interest rates. See the current rates.
The Administration Fee is calculated monthly in arrears based on the daily value of your Account and is deducted directly from the Account. The fee on the first $500,000 is 0.48% pa.
The Model Portfolio Manager Smart Investment Management charges an Investment Fee of 0.05% p.a. for providing and administering the model portfolio.
Managed Fund Trading Fee
For managed fund trading, a transaction charge of $27.50 will be split across all Accounts trading in a managed fund on that day. If the account is the only account trading a managed fund that day the maximum charge would be $27.50.
In-Specie Transfer Fee
A $29.00 fee is payable for the transfer of each stock transferred out of the account. There is no fee for transfers into the account.
A Settlement Fee of $0.33 per securities transaction is payable in addition to any brokerage allocated. This fee is deducted from the cash holding of the account at the time of settlement of the trade.
Add additional shares to investment
Contributions and withdrawals can be in cash or in kind – all CHESS-eligible listed Australian securities are accepted.
Clients can request a "Regular Gearing Holiday" for three months at any time. Otherwise, if the loan balance is $20,000 or above they can cease regular gearing.
Option to suspend regular contribution plan
Clients can suspend their contributions for three months at any time by completing the Regular Gearing and Investment Form from BT Margin Lending.
Choose where dividends get paid
Direct dividends to the cash account linked to the portfolio, have dividends paid into the account linked to SMA (margin loan account), or have them paid into an external bank account.