Australia’s first direct equity investment facility with active management, derivative overlay to enhance income and 100% capital protection at maturity1, provided by global investment bank, UBS AG.
Building on the success of the ASX listed Alpha Managed Income Notes (ASX Code "AFPHA"), Alpha POWER Shares is powered by share portfolios selected by Aegis Equities Research or Lonsec, with investors receiving all dividends and franking credits on those shares.2
Alpha POWER Shares has been specifically designed in consultation with financial planners and SMSF investors, to provide the control, certainty and tax effectiveness which SMSF and HNW clients frequently seek.
Alpha POWER Shares are a flexible and transparent investment and provide a true differentiation for discerning investors and advisers.
Flexibility of active management and full tax efficiency
Instead of normal structured financial products, which are designed offshore and don’t consider Australian investors’ needs, Alpha POWER Shares provide full access to dividends and franking credits on your underlying share portfolio, with the comfort of Aegis or Lonsec as an independent stock picker. Your portfolio is actively monitored and re-balanced to provide diversification, capital growth and enhanced income.
Additionally, because you own these shares, there is no CGT event at the maturity of Alpha POWER Shares – you can continue to own these shares, and receive all future franked dividends and any capital growth.3
Direct access to your shares
Alpha POWER Shares are a unique investment offered through the Alpha Customised Portfolio Service. The Alpha CPS is provided in conjunction with the administrative and custodial services of two of the world’s leading financial institutions, BlackRock Investment Management Limited as Responsible Entity for the BlackRock CPS. The Alpha CPS is Australia’s first open-ended platform for the issue of total return and structured investments. As part of any investment in the Alpha CPS, you have full access to and control over your assets – giving you total peace of mind.
Investment highlights
- Enhanced income – Aegis and Lonsec design your portfolios to provide exposure to stocks which are expected to pay relatively high dividends. This dividend income is enhanced by the use of derivative overlays, increasing the returns to you.
- Tax effective – you receive all dividends and franking credits on your share portfolio, and at the maturity of the Alpha POWER Shares investment you continue to own these shares, with no CGT payable unless and until you dispose of them.1,2,3 You and your adviser control your tax position
- Rules based derivatives overlays – only very specific derivatives can be implemented for you to reduce your risk of loss. Every 3 months put options with an exercise price of 90% of the prevailing share price are purchased for you. At the same time, to enhance your return, call options with an exercise price around 103.5% of the prevailing share price are sold for you.4
Net income generated by the derivatives overlay is paid to you to enhance your income on Alpha POWER Shares. - Capital protection – capital repayment at the end of 7 years from the initial issue of POWER Shares is guaranteed by UBS AG, one of the largest banking groups in the world.5
- Active portfolio rebalancing – your underlying shares are re-balanced in line with recommendations from Aegis or Lonsec, and the derivatives overlay is re-balanced to stay in line with your share portfolio. As part of the provision of its capital guarantee, UBS AG also dynamically manages the allocation in your Alpha POWER Shares account, between shares and fixed income investments, which will be purchased if the value of your shares fall below pre-determined levels in order to ensure 100% capital protection at the end of the 7 year investment term.
- Diversification and yield enhancement – your underlying share portfolio is at the heart of your Alpha POWER Shares investment. You can choose from portfolios selected either by Aegis or Lonsec, which have specifically been mandated to select shares with relatively low volatility and with an emphasis on strong dividend yields with medium term prospects for capital gain.
Both Aegis and Lonsec have designed portfolios which will invest in between 10 to 15 Australian blue chip shares. To be eligible for Alpha POWER Shares these stocks must be in the ASX Top 100 and must have a minimum average daily turnover of $10 million. - Open ended – providing investors with the opportunity to enter and exit their investment on a monthly basis at any time, until maturity.
Risk factors
Exposure to the Alpha POWER Shares Model Portfolio has investment risk, including but not limited to the risks set out below. The value of the Alpha POWER Shares Model Portfolio can go up as well as down. Alpha POWER Shares investors may receive an amount less than their initial investment if they sell their Alpha POWER Shares prior to its maturity date, if there is an Early Maturity Event, or if UBS AG defaults on its payment obligations.
The Alpha POWER Shares derivative overlay is designed to help the investment outperform a direct investment in the Share Portfolio, in all but strong bull market conditions. This helps outperformance in reasonable growth conditions, but can produce under-performance (compared to a simple investment in shares without any overlay) in strong growth market conditions.
Like all investments, there is no return without risk. If there are losses in relation to the share portfolio, the level of income paid to investors may fall or be reduced to nil. If it does so, then no further distributions will be made during the term of Alpha POWER Shares and no further exposure to the Alpha POWER Shares trading strategy will be available. In this case, an investor will need to wait until the maturity date of their Alpha POWER Shares investment to receive the return under the capital protection facility.
Scaleable differentiation with innovative investments
Alpha POWER Shares are offered through the Alpha CPS platform, providing investors with the benefit of an open ended investment. Investors may enter and exit on a monthly basis. This provides investors with more investment flexibility compared to ASX listed or more illiquid investments. Investors should read the Product Disclosure Statement in full and carefully consider the detailed description of the arrangements and risks in the PDS before deciding whether to apply for the Alpha POWER Shares.
You must read and understand the terms and conditions set out in the Product Disclosure Statement dated 19 December 2006 issued by BlackRock Investment Managers Ltd as Responsible Entity for the Alpha SMA (provided through the BlackRock Separately Managed Accounts ARSN 114 818 530) in deciding whether to acquire Alpha POWER Shares. Prior to the maturity of the Alpha POWER Shares investment the value of Alpha POWER Shares will be affected by various market factors such as interest rates, shares and option prices and volatility, the creditworthiness of UBS AG and the time remaining to Maturity Date. As a result and as indicated above there is no assurance that an Alpha POWER Shares investor that sells their Alpha POWER Shares investment prior to maturity will receive a price equal to or in excess of the Alpha POWER Shares investors original investment amount. No capital protection is provided to Alpha POWER Shares investors if they sell their Alpha POWER Shares investment prior to the maturity date.A copy of the Product Disclosure Statement can be obtained by contacting your fi nancial adviser, stockbroker or Alpha Structured Investments. Like all investments, investments in the Alpha POWER Shares involve some risks. The risks include general market risks and risks which are specifi c to Alpha POWER Shares. Please ensure you have read and understood the Risk Factors which are set out in that PDS. No action should be taken on the basis of or in reliance on the information, opinions or conclusions contained in this document. In preparing the information in this document, Alpha Structured Investments did not take into account the investment objectives, fi nancial situation or particular needs of any particular investor. Before making a decision to invest, investors should consider the appropriateness of the product having regard to their relevant personal circumstances. Investors should read the PDS in full and carefully consider the detailed description of the arrangements and risks in the PDS before deciding whether to apply for Alpha POWER Shares. This document is not, and is not intended to be, an offer or invitation for subscription or sale, or a recommendation, with respect to any proposed offering of Alpha POWER Shares or any other securities, nor is it to form the basis of any contract or commitment. Once you have read and understood the PDS you can apply by completing the Application Form in the PDS and sending it to your fi nancial adviser or directly to Alpha Structured Investments. The minimum application amount is $25,000 with multiples of $10,000 after that. You should consult your investment adviser before you invest in Alpha POWER Shares.
- 100% capital protection applies to the initial offering of POWERS on 19 December 2006. Subsequent investors will be protected to these same levels which may be lower than the value of POWER Shares which applies at the time of subsequent investment.
- Subject to reinvestment in the share portfolio in certain market conditions as described in the PDS. Dividends only available to the extent the POWER Shares facility invests in shares. Investors should take tax advice regarding the availability of franking credits from dividends.
- Unless shares have been sold prior to maturity, including as a result of the POWER Shares active risk management process.
- Actual levels of these call options may vary.
- Capital guarantee levels may be lower than prices prevailing for investors subsequent to the initial offer of POWER Shares. UBS AG makes payments to BlackRock Investment Managers Limited as RE for the Alpha POWER Shares facility.
