NEW MACQUARIE Cap protected Fund

[rodimus]

http://www.macquarie.com.au/mq/structuredproducts/lpl/home.htm?source=tfa-email

Did anyone subscribe to their Fusion and Reflexion fund?

I think this new fund is better than those, because you can choose your own ASX stock, and also capital protected?

Also, dunno if the capital protection means if the stock goes under the buy price, u can walk away anytime, no liability? probably just continue to pay the interest for the loan till they sell them? (not clearly stated)

Please discuss

 

[Deepmarine]

It isn't a fund. It is just a Warrant by another name that starts off unlisted and has the option to progress to a listed warrant (Macquarie themselves state this in their PDS).

Read the fine print of the PDS and it has the same / similar break costs as a run of the mill protected loan that Macquarie, CBA, Westpac etc. all provide. Also - they are very cagey about stating what the break costs are - so you could be in for a rude shock if you try and get out of the product.

yes the capital protection means that if the stock is underwater, you can walk away without repaying the loan principle (the warrant structure includes a put option whose strike is at the loan value per stock that the bank lends you) - you pay for this put option without it being explicitely stated that you're buying a put for $X.

Fusion is an investment in units in managed funds where capital protection is provided (but not guaranteed) by Macquarie switcing you from the risky asset into a riskless asset like a cash trust - the risk being that your exposure to the underlying fund can be reduced to zero if there is a market drawdown. (this is called CPPI)

Reflexion is a trust investment where capital protection is provided by swaps / bond plus call. Also - gains in this are taxed on revenue account according to the opinion in the PDS - thus requiring a much higher gain to get the same after tax outcome if you're missing out on the CGT discount.

Fusion / Reflexion will have lower interest costs compared to the listed protected loan - say around 11% vs. 18-22%.