Who is this for?
- Investors seeking to build an equities portfolio that is funded by Westpac and has capital protection at maturity; or
- Investors who would like to borrow money against Securities they already hold.
Eligible investors include:
- 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; or
- A self managed supeerannuation fund (SMSF).
Key benefits for your client
Borrow with capital protection
Clients are able to build a Portfolio by choosing Securities from our Approved Securities List or they can borrow (for certain investment purposes) up to 100% of the value of Securities they already own, with up to 100% capital protection at maturity in respect of the Loan amount.
No margin calls
As the holder of the PEL, your client will never be subject to margin calls with respect to the Loan.
The benefits of listed securities
ASX listed securities generally provide capital growth through rising share and unit prices over the long term. Your clients receive many of the benefits of ownership of listed securities, including dividends or distributions and franking credits (subject to eligibilty).
Interest payments may be tax deductible and franking credits are issued with dividend payments. Please refer to the detailed tax section in the PDS.
Investors receive a flexible Loan Term of up to and including 5 years. Clients also have flexible interest rate options with fixed or annual resettling rates and the option to pay interest annually in advance or monthly in arrears.
Suitable for SMSFs
SMSF investors can receive a limited recourse loan, although some other options will not be available to them, such as a Top-up Loan, Security Reset Facility and Portfolio Adjustment Facility. SMSF investors are not able to borrow against securities they already own.
Below is a summary of only some of the risks – it is important to read the PDS, which explains the key risks relating to the Westpac PEL.
The Westpac PEL is a geared investment. Investors need to understand the implications of market risk and that gearing can magnify both losses and gains. Investors risk losing money if the securities do not appreciate in value by an amount that covers the interest that must be paid on the Loan and the fees associated with the Loan.
There are risks associated with early termination. In particular, Capital Protection does not apply if a Loan terminates before Maturity, although, for an SMSF Investor, the obligations on default are limited recourse. Also, there is a risk that the investor will be charged significant Break Costs and Corporate Actions could adversely affect the investment in a Loan.
What are the approved securities for investors?
- Approved PEL Securities
What are the fees and charges?
The costs of the Loan are listed below, however your client can reduce the upfront protection costs by giving up some of the potential returns at Maturity. The client can choose between fixed interest or an annually resetting interest rate.
- Interest on the Loan (and interest on any Interest Loan)
- Capital Protection Fee (this can be paid either as an upfront payment, or as a component of the Interest Rate)
- Application Fee (up to 1.1% of Loan amount)
- Brokerage fees
- Break costs associated with early repayment of a Loan
Options at the start of Term
Clients can buy Securities or borrow against Securities they already own (for Non-SMSF Investors only). They can choose to pay for interest annually, monthly or monthly in arrears. They can also request a level of protection between 50–100% of the value of the Securities (plus Brokerage, any Adviser Service Fee and the Application Fee) at the Issue Time.
Options during the Term
Clients can make a Parcel Adjustment if they are a Non-SMSF Investor (Security Reset Facility, Top-up Loan, Portfolio Adjustment Facility) and request to repay the Loan prior to Maturity.
Options at Term completion
They can opt to sell the securities, keep the securities, extend or roll-over the loan at the time of maturity.