The Aussie TEP Fund is an unregistered wholesale managed investment scheme which pools Investors’ money and will invest in a portfolio of Life Policies which have an asset value and a fixed maturity date. These are known as Traded Endowment Policies (TEPs).
The Fund is only available to Wholesale investors and has a minimum application amount of $100,000.
The Fund seeks to provide Pre-Tax (grossed up returns) exceeding 3.50% pa above the 5/10 year Commonwealth Bond rate.
Between 1930 and 1990, Australia’s major life companies only sold a single style of product- “conventional life insurance” policies.
These traditional policies have an asset value, (called “surrender value” by the Life Company).
TEPs are second-hand conventional life policies.
The Fund has exclusive access to TEPs in Australia under a Supply Agreement with The Outlook Group. The Outlook Group has 20 years’ experience in sourcing TEPs for Investors. (The Fund Manager, Aussie TEP Management Pty Ltd is a member of the Outlook Group).
The Fund aims to provide attractive tax effective secure returns to investors. Quarterly tax effective/exempt distributions are expected to commence from year 5.
Key Features of the Assets and Fund are;
- “A” Credit Rated issuing Life Companies- AMP, MLC, Comminsure
- TEP acquisition cost will generally carry 90-110% capital guarantees
- TEPs are liquid assets that can be typically cashed within 7-10 days
- TEPs ownership have a statutory title mandated by the Life Act 1995
- TEPs gains are generally taxed as income with a 30% Tax Rebate or are up to 100% Tax-Free (depending on the duration)
- TEP growth is very stable, aligning with the 5/10 year Commonwealth Bond rate and is supported by 70 years of smoothing bonus rates from the issuing life companies
- TEPs come with an ‘In-built” IRR/yield subsidy from the original owner
- Typically allows investors more liquidity options than direct TEP ownership
- is expected provide tax-effective quarterly cashflow from year 5, (with maturing TEPs)
- is expected to provide a mix of tax- effective and tax exempt quarterly cashflow from year 8, (with maturing TEPs)
- The Fund has a Private Binding Tax Ruling
- The Fund has a Supply agreement to source TEPs and technology from Australia’s only TEP source
- No annual income to be assessed to the Fund or unitholders until TEPs mature
- TEP purchase pricing certified by an independent Actuary
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