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Indirect cost ratio estimates as of January 2021

Based on a review of the estimated indirect cost ratios (ICR) published in the current FirstChoice and FirstChoice Wholesale Product Disclosure Statement (PDS), Colonial First State is able to provide an updated estimate for the following investment options.

FirstChoice Super and Pension products

Product Option name Estimated indirect Cost Ratio (pa) disclosed in 30 November 2020 PDS Revised estimated indirect cost ratio (pa)
FirstChoice Wholesale Personal Super FirstChoice Wholesale Balanced 0.28% 0.26%
FirstChoice Wholesale Conservative 0.19% 0.18%
FirstChoice Wholesale Diversified 0.25% 0.24%
FirstChoice Wholesale Geared Global Share 0.72% 0.27%
FirstChoice Wholesale Geared Growth Plus 0.59% 0.53%
FirstChoice Wholesale Global Infrastructure Securities 0.65% 0.32%
FirstChoice Wholesale Growth 0.30% 0.28%
FirstChoice Wholesale High Growth 0.28% 0.25%
FirstChoice Wholesale Moderate 0.27%
0.25%
UBS Wholesale Diversified Fixed Income 1.39% 0.06%
FirstChoice Wholesale Pension FirstChoice Wholesale Balanced 0.30% 0.29%
FirstChoice Wholesale Conservative 0.20% 0.19%
FirstChoice Wholesale Diversified 0.25% 0.24%
FirstChoice Wholesale Geared Global Share 0.78% 0.33%
FirstChoice Wholesale Geared Growth Plus 0.66% 0.60%
FirstChoice Wholesale Global Infrastructure Securities 0.66% 0.32%
FirstChoice Wholesale Growth 0.32% 0.30%
FirstChoice Wholesale High Growth 0.31% 0.28%
FirstChoice Wholesale Moderate 0.28% 0.27%
UBS Wholesale Diversified Fixed Income 1.40% 0.07%
FirstChoice Wholesale TTR Balanced 0.31% 0.29%
FirstChoice Wholesale TTR Conservative 0.21% 0.20%
FirstChoice Wholesale TTR Diversified 0.27% 0.26%
FirstChoice Wholesale TTR Growth 0.33% 0.31%
FirstChoice Wholesale TTR High Growth 0.32% 0.29%
FirstChoice Wholesale TTR Moderate 0.29% 0.28%
UBS Wholesale TTR Diversified Fixed Income 1.40% 0.07%
FirstChoice Personal Super FirstChoice Balanced 0.30% 0.28%
FirstChoice Conservative 0.20% 0.19%
FirstChoice Diversified 0.27% 0.26%
FirstChoice Geared Global Share 0.75% 0.29%
FirstChoice Geared Growth Plus
0.63% 0.57%
FirstChoice Global Infrastructure Securities 0.67% 0.35%
FirstChoice Growth 0.30% 0.28%
FirstChoice High Growth 0.28% 0.25%
FirstChoice Moderate 0.27% 0.26%
UBS Diversified Fixed Income 1.41% 0.08%
FirstChoice Pension FirstChoice Balanced 0.31% 0.30%
FirstChoice Conservative 0.20% 0.19%
FirstChoice Diversified 0.24% 0.23%
FirstChoice Geared Global Share 0.81% 0.37%
FirstChoice Geared Growth Plus 0.58% 0.52%
FirstChoice Global Infrastructure Securities 0.70% 0.36%
FirstChoice Growth 0.32% 0.30%
FirstChoice High Growth 0.31% 0.28%
FirstChoice Moderate 0.28% 0.27%
UBS Diversified Fixed Income 1.42% 0.08%
FirstChoice Employer FirstChoice Balanced Select 0.33% 0.31%
FirstChoice Conservative Select 0.22% 0.21%
FirstChoice Diversified Select 0.30% 0.29%
FirstChoice Global Infrastructure Securities Select 0.67% 0.35%
FirstChoice Growth Select 0.30% 0.28%
FirstChoice High Growth Select 0.28% 0.25%
FirstChoice Moderate Select 0.27% 0.25%
UBS Diversified Fixed Income Select 1.42% 0.08%

FirstChoice Investment products

Product Option name Transactional and Operational (T&O) Cost disclosed in 30 November 2020 PDS Revised estimated total T&O Cost
FirstChoice Wholesale Investments FirstChoice Wholesale Balanced 0.53% 0.51%
FirstChoice Wholesale Conservative 0.34% 0.33%
FirstChoice Wholesale Diversified 0.44% 0.42%
FirstChoice Wholesale Geared Global Share 0.83% 0.40%
FirstChoice Wholesale Geared Growth Plus 1.27% 1.20%
FirstChoice Wholesale Global Infrastructure Securities 0.79% 0.44%
FirstChoice Wholesale Growth 0.56% 0.54%
FirstChoice Wholesale High Growth 0.51% 0.47%
FirstChoice Wholesale Moderate 0.49% 0.47%
UBS Wholesale Diversified Fixed Income 1.58% 0.13%
FirstChoice Investments FirstChoice Balanced 0.59% 0.57%
FirstChoice Conservative 0.36% 0.35%
FirstChoice Geared Global Share 0.94% 0.51%
FirstChoice Geared Growth Plus 1.17% 1.11%
FirstChoice Global Infrastructure Securities 0.82% 0.47%
FirstChoice Growth 0.59% 0.57%
FirstChoice High Growth 0.55% 0.52%
FirstChoice Moderate 0.50% 0.49%
UBS Diversified Fixed Income 1.67% 0.22%

What are indirect costs?

Indirect costs are costs incurred in underlying vehicles in which an investment option invests. These costs are not charged to you as a fee, but do reduce the investment return you receive on an investment option via the unit price.

Indirect costs are not paid to Colonial First State. Indirect costs may include certain transaction costs such as brokerage, as well as the costs associated with using derivative financial products and other investment vehicles.

What’s an indirect cost ratio (ICR)?

The ICR shows the investment-related costs paid by the fund. The ICR is an estimate, which is expressed as a percentage of the average net asset value of the fund, during the most recently completed financial year. ICRs are published in the PDS for each product.

In the most recent PDS, these estimates are based on the investment experience of the previous financial year ending 30 June 2020. The actual amounts paid may be greater or less than the estimated amounts disclosed.

Why are the indirect costs published in the current PDS higher than usual?

ICRs for some investment options in the current FirstChoice PDSs are higher than usual. This is largely due to higher transaction costs incurred by investment managers during the market volatility experienced as the COVID-19 pandemic began, particularly in March-April 2020. Increased transaction costs can be caused by factors including:

  • Increased portfolio turnover to maintain strategic asset allocations or manage gearing ratios in geared funds. This can generate additional transaction costs within the portfolios that weren’t necessarily recovered by buy/sell spreads;
  • Increased bid /ask spreads, including for fixed interest securities that weren’t necessarily recovered by buy / sell spreads;
  • Over-the-counter (OTC) derivative and currency spreads impacting some funds that use these instruments.

The ICRs published in our 30 November 2020 FirstChoice PDSs are an estimate of indirect costs a member may pay based on costs incurred in the year ending 30 June 2020. It is a retrospective estimate. Past costs are not a reliable indicator of future costs. Future costs may differ.

If markets are less volatile over the next 12 months compared to the last 12 months, the estimates of indirect costs reported next financial year may be lower for many investment options.

Need more information?

To find out more about this update, please refer to the relevant PDS, speak to your financial adviser, or call us on 13 13 36, 8am-7pm, Monday to Friday (Sydney time).

Disclaimer
Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the issuer of super, pension and investment products. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision. A PDS for Colonial First State’s products are available at colonialfirststate.com.au or by calling us on 13 13 36.