Australia's first direct equity investment facility into Asia's growth markets with active management, derivative overlay and full capital protection at maturity.
Building on the success of Alpha POWER Shares' Australian portfolios, Alpha POWER Shares – 'Asian Lions' is Australia's first direct equity investment facility into Asia's growth markets with active management, derivative overlay and full capital protection at maturity! Designed to withstand volatile markets, Alpha POWER Shares distributed a mighty 13.8% return net of fees in 2007 (plus franking)¹. Powered by a share portfolio selected by Lion Capital of Singapore (voted Singapore's “Best Fund Group-5 Years” for 2007 by Standard & Poor's), with enhanced returns from a derivative overlay implemented by UBS Bank AG, plus the unique 6 year capital protection provided by UBS Bank AG.
Alpha POWER Shares – 'Asian Lions' has been specifically designed in consultation with financial planners and SMSF investors, to provide the CONTROL, CERTAINTY and ACTIVELY MANAGED exposure to the best Asian markets which discerning SMSF and HNW clients are now seeking. Forget the tired approach of benchmark aware international fund managers – by ignoring GDP growth the traditionalists often miss out on the fastest growing economies in the world. Instead, our specialist Asian stock picker uses an absolute return style, targeting the high income and growth of the “blue chips” of Asia's developed economies.
Flexibility of an award winning active manager targetting Asia's blue chip stocks
Instead of normal structured financial products, which are designed offshore and don't consider the needs of Australian investors, Alpha POWER Shares – 'Asian Lions' uses an independent stock picker with a carefully designed investment mandate. Lion Capital is Singapore's largest fund manager with in excess of US $24bn fum, and has won 80 risk adjusted return awards in the last 5 years. Lion Capital is mandated to select stocks from the high growth economies of South Korea, Taiwan, Singapore, Hong Kong, and Malaysia². Eligible stocks must pass stringent yield, capitalization, liquidity and valuation criteria. This ensures that your portfolio is actively monitored and re-balanced to provide diversification, capital growth and enhanced income.
Efficient & Low cost access to your shares
Alpha POWER Shares – 'Asian Lions' is a unique investment offered through the Alpha Customised Portfolio Service. The Alpha CPS and Alpha POWER Shares – 'Asian Lions' 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, and UBS Bank AG. To minimize share transaction and holding costs, UBS Bank AG issues a capital protected note to BlackRock (which holds it on behalf of investors). This UBS Note combines exposure to the shares which are selected by Lion Capital, along with the other components of the investment. 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 with medium term capital growth – Lion Capital selects your portfolio to provide exposure to stocks which are expected to pay relatively high dividends, combined with medium term capital growth potential in leading Asian economies, which meet stringent investment criteria. This dividend income is enhanced by the use of simple and conservative derivative overlays, increasing investment returns and reducing risk.
- Rules based derivatives overlays – only very specific derivatives can be implemented: – to reduce risk of loss, every 3 months put options with an exercise price of 90% of the prevailing share price are purchased; – at the same time, to enhance return, call options with an exercise price around 103.5% of the prevailing share price are sold for you. The net income generated by the derivatives overlay is paid to investors each quarter to enhance the income on Alpha POWER Shares.
- Capital protection – capital repayment at the end of 6 years from the initial issue of POWER Shares is guaranteed by UBS Bank AG, one of the largest banking groups in the world.
- Full Currency Hedging – dividends on the underlying shares, and the capital value of those shares, is fully hedged to remove FX risk.
- Active portfolio rebalancing – your underlying shares are re-balanced in line with recommendations from Lion Capital, and the derivatives overlay is re- balanced to stay in line with the share portfolio. As part of the provision of its capital guarantee, UBS Bank 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.
- Specialist manager - an Australian retail first: Alpha POWER Shares use the stock selection services of Lion Capital; internationally recognised, specialist portfolio managers, who defensively manage the underlying investment portfolios for Alpha POWER Shares – “Asian Lions”. Lion Capital is a wholly owned subsidiary of Singapore's OCBC Bank and is the largest fund manager in Singapore, with 80 risk adjusted awards over the last 5 years. A full description of Lion Capital may be viewed at the Alpha website.
- Designed for financial planners – an investment product that considers the needs of Australian financial planners, specifically designed for SMSF and other sophisticated investors.
- Open ended – providing investors with the opportunity to enter and exit their investment on a monthly basis at any time, until maturity.
- Designed for financial planners – an investment product that considers the needs of Australian financial planners, specifically designed for SMSF and other sophisticated investors.
- Diversification - offers diversification from traditional Australian equity investments, and into the Asian powerhouse economies.
- Comparatively low fee structure and transparent product – the fees within Alpha POWER Shares are low compared to other similar investments, to further align with your interests.
Diversification and yield enhancement
Your underlying share portfolio is at the heart of your Alpha POWER Shares investment. Lion Capital has 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.
Lion Capital has designed portfolios which will invest in 20 Asian blue chip shares, spread across the leading Asian economies. To be eligible for Alpha POWER Shares these stocks must have a minimum average daily turnover of $10 million, with a minimum equivalent market capitalization of US$400m, and with low volatility (less than 30%). A full list of the share portfolio for Alpha POWER Shares – “Asian Lions” may be viewed at the Alpha website.
Capital growth and derivatives overlay
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.
For example, where the notional call options are sold with a 3 month maturity and with an exercise price set at 103.5% of the share price, the Alpha POWER Shares investor will benefit from the income received from the sale of those notional call options, plus a potential annual capital appreciation of up to 14% of the underlying share portfolio.
This helps out-performance in reasonable growth conditions, but can produce under-performance (compared to a simple investment in shares without any overlay) in strong growth market conditions.
Risk factors
Exposure to the Alpha POWER Shares Model Portfolio is risky, including but not limited to the risks set out below. 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 of their initial investment amount.
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 Alpha POWER Shares prior to its maturity date, if there is an Early Maturity Event, or if UBS Bank AG defaults on its payment obligations.
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 Bank 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.
Scaleable differentiation with innovative investments
Alpha POWER Shares is 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.
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 Bank 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.
How to apply for Alpha POWER Shares?
Advisers can access Alpha POWER Shares through a retail PDS. For more information and to obtain your Product Disclosure Statement speak to your financial advisor, or call...
Alpha – 1300 769 694
Alpha POWER Shares is 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.
Alpha POWER Shares Disclaimer
© Alpha Structured Investments P/L AFSL 290054
You must read and understand the terms and conditions set out in the Product Disclosure Statement dated [XX] 2008 issued by BlackRock Investment Managers Ltd as Responsible Entity for the Alpha SMA in deciding whether to acquire Alpha POWER Shares. A copy of the Product Disclosure Statement can be obtained by contacting your financial 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 specific 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, financial 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 financial adviser or directly to Alpha Structured Investments. The minimum application amount is $25000 with multiples of $10000 after that. You should consult your investment adviser before you invest in Alpha POWER Shares.
- Past performance may not be a reliable indicator of future performance. Distribution stated is for the Alpha POWER Shares Lonsec portfolio for the period 18 December 2006 to 20 December 2007. Please refer to the Alpha website for live pricing and details of income distributions and capital value of Alpha POWER Shares, at www.alpha-invest.com.au.
- Mandate also permits investment in Japan, Thailand and Phillipines, country allocation based on GDP growth ranking and stock specific investment criteria as set out in the PDS for Alpha POWER Shares – Asian Lion's. Initial portfolio allocates to South Korea, Taiwan, Singapore, Hong Kong, and Malaysia.
