From 15 May 2017, the investment manager, name and features of the UBS Tax Effective Income option will change. The option will be managed by Colonial First State’s Investments Team (Investments Team) and named the FirstChoice Multi-Index Growth option.
Why the change?
We undertook an annual review of the FirstChoice investment menu and decided to replace the investment manager for the UBS Tax Effective Income investment option. The Investments Team will implement a comparable investment objective and strategy for the option
This option will now utilise multiple managers to gain access to more asset classes which will provide greater diversification in your portfolio and is expected to deliver a similar risk and return profile. As a result of this change, the total investment and administration fees of your opion will reduce from 1.94% to 1.56%.
Here is a summary of the changes:
|Investment option summary|
|Previous name: UBS Tax Effective Income||New name: FirstChoice Multi-Index Growth|
|Previous objective||New objective|
|To provide income and achieve returns (before fees, charges and taxes) that on average exceed inflation by at least 5% per annum, over periods of five years or more. The option aims to outperform its composite benchmark (40% S&P/ASX 200 Accumulation Index excluding A-REITs; 30% S&P/ASX 200 A-REIT Accumulation Index; 30% Bloomberg AusBond Bank Bill Index + 1%) over rolling three-year periods before fees and taxes.
||To provide long-term capital growth with less fluctuations of returns than ‘high growth’ investment options. To outperform the option’s composite benchmark over rolling three-year periods before fees and taxes.
|Previous strategy||New strategy|
|To invest in a diversified mix of predominantly Australian assets with a bias towards income producing securities. The strategy actively allocates between the asset classes using the manager’s ‘3-D’ tactical asset allocation model, developed to reflect the three core factors that impact investment markets: macro fundamentals, market psychology and market valuation. This process takes into account portfolio risk characteristics and is focused on maximising the tax effectiveness of the portfolio.||The option allocates 80% of investments to growth assets such as shares, property and infrastructure to provide potential for capital growth. The shares component is managed by Realindex Investments using the RAFI® methodology to select securities. The property and infrastructure components are managed using market capitalisation indices. 20% of the portfolio is allocated to defensive assets such as fixed interest and cash to provide the portfolio with relatively stable returns. The fixed interest component includes government bonds managed on a traditional index basis and a broadly diversified portfolio of credit securities. The portfolio aims to hedge currency risk except for the allocation to emerging market shares and part of the allocation to global shares.
|Previous asset allocation||New asset allocation|
|Australian shares||30 ‑ 50%||40%||Australian shares||33%|
|Property securities||20 ‑ 40%||30%||Global shares||15%|
|Fixed interest||0 - 40%||30%||Global shares - hedged||15%|
|Cash||0 - 25%||0%||Emerging market shares||3%|
|Global property securities||7%|
|Global infrastructure securities||7%|
|Previous investment category: Single Manager - Growth||New investment category: Multi-Manager - Growth|
|Previous standard risk measure: 6||New standard risk measure: 6|
|Previous investment timeframe: At least 7 years||New investment timeframe: At least 5 years|
|Previous Management Cost: 1.94%||New Management cost: 1.56%|
The FirstChoice Mulit-Index Growth will be available to both existing investors and any new investors.
If you would like more information about this option, including how to switch from it, please call us on 13 13 36, Monday to Friday, 8am to 7pm Sydney time.