Frequently Asked Questions
You have two choices on how to receive your monthly Income.
- Reinvest: Add it back into your account balance to earn additional Income. Reinvested Income will receive the same Target Rate, Maturity Date and layers of Protections as your Opening Balance.
- Pay to bank: We pay it to your linked bank account every month.
Simply make your election in your account dashboard.
You can change your election at any time during the month. Just make sure you make your election at least 5 business days before month-end for your preference to be updated, otherwise, it will apply to the one after that.
To keep Target Rates relevant, our accounts rates aim to deliver a set amount above the Reserve Bank of Australia’s Official Cash Rate (“Cash Rate”). Each Term has a specific Income objective calculated by reference to the Cash Rate, plus a fixed spread. If the Cash Rate changes, our Target Rates change in line with the Cash Rate.
Target Rates are not guaranteed, are not forecasts, may not be achieved . However, private credit loans are contractual by nature, and contain interest and principal repayment terms, as well as lender protections which the borrower must meet. This means the lender has predictable interest payments and protections that work to minimise any potential loss. As the private credit loans underpinning the TermPlus portfolio are contractual in nature, there is a built-in level of certainty around future cashflows, which can also include characteristics such as floating interest rates and capital security.
Your Income comes first.
To provide further reliability of Income, we invest our own money alongside Account Holders, in what we call a Support Account.
The Support Account seeks to provide reliable Income via two layers of protection.
1. Priority Income Entitlement
The Support Account, just like customer accounts, earns income on its invested balance. Because we’re committed to supporting your saving journey, TermPlus Customers have priority over this income if ever it’s needed to support target rates. Think of it as an extra income pool that works to support Target Rates and returns for your account in the event of an earnings deficit.
2. Income Stabilisation
In the event that the value of your Term Account balance decreases for any given month, we will continue to calculate your Target Rate Income on the total Invested Amount (including any reinvestments of past Income).
The combination of the structural characteristics of the underlying TermPlus assets, and the TermPlus layers of account protections, are core to our customer first’ approach to delivering exceptional Term Accounts.
This customer-first approach means more stable and reliable Income.
The monthly payment of accrued Income is not guaranteed and is subject to TermPlus generating sufficient return.
TermPlus delivers unique access to a diversified portfolio offering by robust characteristics (as outlined below), and has been designed with 3 distinct built-in layers of account protection to attract investors.
READ THE FULL OVERVIEW HERE >>
Layers of protection built-in to TermPlus Accounts
In addition to the structural and contractual protections in the global private credit sector (as outlined below), and the added risk minimisation that comes from our high level of diversification and investment selection, TermPlus holds its own investment in TermPlus called the Support Account, which underpins 3 additional built-in layers of protection for TermPlus account holders.
The Support Account
Our commitment to our customers.
The Support Account is an investment alongside Account Holders put in place to underpin the 3 distinct built-in layers of protection provided for your savings.
The Support Account cedes priority of both capital and income to account holders with the aim of providing additional stability and reliability to TermPlus customers.
Priority Income Entitlement
Customer priority over the income generated by the Support Account if needed.
Think of it as an extra income pool that works to support Target Rates and returns for your account.
5% Saving Support
A top-up payment for up to 5% of your total invested amount at the end of your term.
As discussed above, the likelihood of negative performance, and therefore a decline in an account holder’s capital balance, is very low. However, to provide further protection, any decline in the amount you invest in TermPlus is eligible to be topped up by the Support Account at Maturity, up to a maximum of 5% of the total amount you invested (including any Income you have reinvested over the course of your term, but not including, and offset by, any Income already paid out to you during the course of your term).
Income Stabilisation
Anchored target rate calculations.
In the event that the value of your Term Account balance decreases for any given month, we will continue to calculate your Target Rate Income on the total Invested Amount (including any reinvestments of past Income).
Key characteristics of the TermPlus master portfolio
Contractual Nature. TermPlus has predictable interest payments and protections that work to minimise any potential loss as a result of the loans underpinning the TermPlus portfolio being contractual in nature. This provides a built-in level of certainty around future cashflows, which can also include characteristics such as floating interest rates.
Diversification. The TermPlus portfolio is made up of over 2,000 individual loans, and is constructed by global investment leader Mercer. Mercer has over US$16 trillion in assets under advice (latest figure available as at 30 June 2023). The 2,000 loans provide a great level of diversification which adds additional stability to capital and returns by spreading investments across non-cyclical industries and reducing concentration risk in any borrower, market, region or sector.
Seniority. Private credit loans encompass both Senior Debt and Junior / Mezzanine Debt. These loan types typically make up between 45% to 70% of a company’s capital structure, with the remaining 30 to 55% typically being equity. Should a company experience financial difficulties or fail, the senior parts of the capital structure have priority over the assets. Senior Debt holders are entitled to the first-priority claim on assets, and all debt holders have priority over equity holders.
All other things being equal, this implies that a company would have to lose between 30% to 55% of its value before private credit loans would experience any capital losses.
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We take a truly customer-first approach whereby TermPlus will only receive any return once account holders are delivered their full expected outcomes.
The combination of the structural characteristics of the underlying TermPlus assets, and the TermPlus layers of account protections, are core to our customer-first approach to delivering exceptional Term Accounts.
READ THE FULL OVERVIEW HERE >>
A comprehensive summary of the risks to consider when investing in TermPlus is set out in the TermPlus PDS.
1. Returns in USD. 10 year period from 1 July 2013 to 30 June 2023. Sources: S&P (S&P 500 Total Return Index), Bloomberg (Bloomberg US Corporate Total Return Value Unhedged USD), Burgiss (Burgiss – Private Debt (North America)), and Thomson Reuters Datastream (ICE BofAML US High Yield Master II, S&P Leveraged Loan). S&P, Bloomberg, Burgiss and Thomson Reuters have not provided consent to the inclusion of statements utilising their data. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily a guide to future performance.
2. Sources:
• USD$ Cumulative Default Rate 1995 – 2021: S&P LCD & CreditPro (1995 to 2021), as at 31 December 2021. The cumulative default rate is the percentage of commercial borrowers within a certain category that have defaulted on their obligations by a specific point in time. It is the total number of defaults accumulated over a period, expressed as a percentage of the initial loan pool. This metric helps investors and analysts to assess the historical default likelihood of borrowers within a specific category over different timeframes. The S&P LCD cumulative default rate has a one-year lag since it assumes a loan will not default within one year of origination. Past performance is not a reliable indicator of future performance and may not be repeated.
• USD$ Average Annual Recovery Rate 1995-2022: S&P LCD & CreditPro (1995 to 2022). The Annual Recovery Rate is the average percentage of the loan principal amount recovered by lenders following a default event within a specific year. This metric provides insight into the expected loss in case of a default, showing how much lenders might recoup on their investments on average. Middle market loans defined as those <$500m in size. Past performance is not a reliable indicator of future performance and may not be repeated.
S&P LCD & CreditPro have not provided consent to the inclusion of statements utilising their data. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily a guide to future performance.
3. Source: Private credit annualised yields to maturity are estimates based on Mercer analysis on the basis that such loans are held to maturity. Mercerhas not provided consent to the inclusion of statements utilising their data. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily a guide to future performance.
Pengana Capital Limited (ABN 30 103 800 568, AFSL 226566) (“Pengana”) is the issuer of units (“Term Accounts”) in TermPlus (ARSN 668 902 323) (“TermPlus”). The offer of Term Accounts in TermPlus will be made in the Product Disclosure Statement for TermPlus (“PDS”). The PDS and the Target Market Determinations for TermPlus can be obtained by contacting TermPlus on 1300 883 881 or from www.termplus.com.au. A person should consider the PDS in deciding whether to acquire, or to continue to hold, Term Accounts in TermPlus. This document was prepared by Pengana and does not contain any investment recommendation or investment advice.
TermPlus offers broad exposure to the Global Private Credit asset class, investing overseas in Western Europe and the US, and also to a lesser extent in Australia. The asset class exposure is diversified by Underlying Manager, strategy, geography, sector, credit quality and type of instrument.
The performance of, or the repayment of capital, or income invested in TermPlus is not guaranteed. An investment in TermPlus is subject to investment risk including a possible delay in repayment and loss of income and principal invested. Past performance is not a reliable indicator of future performance and may not be repeated.
Mercer Consulting (Australia) Pty Ltd (MCAPL) ABN 55 153 168 140, Australian Financial Services Licence #411770.
‘MERCER’ is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.
This document has been prepared without taking into account any person’s investment objectives, particular needs or financial situation. It is general information only and should not be considered investment advice and should not be relied on as an investment recommendation. Before acting on any information contained within this document a person should consider the appropriateness of the information, having regard to their objectives, financial situation and needs.
Certain expressions used in this document have defined meanings which are in the PDS.
Easy. Quick. Seamless. Your TermPlus Account has its own easy-to-use account dashboard from where you can manage and track your applications, get an overview of your accounts, track your earnings and access tax statements etc.
The Target Rate is expressed on an annualised basis, net of any fees and costs.
The underlying master portfolio of global investments that is used to achieve the Target Rates paid to TermPlus accounts pays fees to underlying fund managers. These fees may impact the Income paid by TermPlus.
For a breakdown of fees and costs please refer to the PDS.
Your Income payments are based on the starting balance of your Account. You have the option of adding Income payments to your account balance, which means that they will accrue additional Income in following months. If you would like to add new funds to earn Income, this can be done by opening another Term Account using the ‘add account’ button on your dashboard. As this is a ‘term based’ account, funds cannot be withdrawn until the Term is over.
You have 2 choices as to what is to occur at the end of the Term.
- Rollover into a new Term
- Withdraw your balance to be paid back into your bank account, this would include any income reinvested through the course of your term account.
You also have the option to do a partial withdrawal and partial rollover.
End of term elections need to be made by the due date that is noted on your account in the customer dashboard.
Need to Know More?
Click here to contact our client service or simply call 1300 883 881 for assistance.
