The Macquarie Fusion Funds are investments that provide you with the opportunity to gain exposure to a broad selection of equity investments, with the ability to borrow 100% of your investment amount and protect 100% of your capital.
Macquarie Bank is no longer called 'the millionaires factory' just on their reputation for large staff bonuses. Macquarie operates internationally, and is Australia's largest wealth provider of wealth management products. They are now also ranked by market capitalisation as Australia's largest bank, due to their rampaging share price that has more than tripled in the last five years.
In line with the Macquarie's forward thinking philosophy, the Fusion Funds are aimed at building wealth for investors with an income. These funds are not intended to generate income from capital like a traditional investment, so they are generally not suitable for retirees. The market served by fusion is targeted towards young people with some surplus income, who wish to utilise that income to build wealth by leveraging the share market over a period of approximately five years.
So just what do Macquarie customers get? Well, according to their website, the Fusion Funds offer the following features:
In simple terms, the Fusion Funds work as follows:
Step 1 - Macquarie Bank provides finance for a set amount, subject to approval, for you to invest in a selection of managed funds. This amount can be up to 100% of your total investment. The current variable rate is 9.95% p.a. There is a 12 month fixed rate option available at 10.50% p.a., or for 10.60% p.a. you can fix the rate for the duration of the term.
Step 2 - You select where you would like your money invested from the approved list of 22 funds. These funds provide you with the opportunity to diversify your portfolio across a range of asset classes and investment styles, including Australian and International equities, alternative investments, property securities and index funds.
Step 3 - Macquarie Bank Issues a policy to protect 100% of your initial investment amount at maturity if you obtain the investment loan, or use your own funds, by way of a put option. Importantly, there are no margin calls.
Step 4 - Make your interest payments monthly or upfront. If your investment is fully financed, this will be your only cash outlay.
Step 5 - Claim a deduction for your interest payments on your tax return, subject to finalisation of the ATO Product Ruling, and collect your tax refund!
So if you are looking to access the historically high returns of a leveraged equity investment, but without the full risk of direct margin lending, Macquarie Fusion Funds may be the choice for you!