The Geared Growth Fund invests mainly in growth assets and is designed to help you magnify your long-term returns by giving you access to gearing.
‘Gearing’ simply means borrowing money to invest. The Geared Growth Fund increases the effective size of your invested funds by purchasing additional investments with borrowed funds.
Just like getting a mortgage on a house, gearing or borrowing to buy additional investments in a fund amplifies your returns, both up and down.
The fund’s target gearing ratio is 35%, meaning it may borrow 35 cents for every $1 invested in the fund.
E.g. if your underlying investments in the fund increased by 10%, you would receive a 13.5% return. However, if your underlying investments in the fund fell by 10%, your account balance would fall by 13.5%.
See the fund’s PDS for more information.
Although gearing may give you more volatile returns in the short-term, it has the potential to increase your returns over the long-term.
This is because long-run historical average returns from growth assets (shares and property) tend to be higher than long-run historical average interest rates.
Gearing amplifies your returns – both up and down. It depends on how comfortable you are with market ups and downs (your risk profile) and how long you plan to invest in the fund (your investment timeframe).
Because the Geared Growth Fund utilizes gearing to invest in predominately growth assets, with little or no income assets, it is suitable for investors who have an investment timeframe of 15 years+ and who are comfortable with a higher level of risk in order to potentially achieve greater returns.
This fund aims to provide savers with a portfolio of growth-oriented assets to maximise the potential for capital gains over the long term.
Expected long term annual return (after fees, before tax)
Annual fund charge (estimated total)
Expected returns are calculated based on long-run expectations for investment markets and fund performance, and are not a guarantee of future results. The calculation takes information on how market returns have varied in the past and gives a range of what is assessed to be likely in the future. The ranges of expected returns have been calculated using a statistical tool of 2 ½ standard deviations of return volatility – this means that actual returns are expected to fall outside these ranges 1 year out of every 100. While these ranges may be used as a guide, due to the uncertainty inherent in financial markets they are also not guaranteed.
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