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Westpac BlueChip20 FAQs

Frequently asked questions

BT Margin Lending is widely acknowledged as a leading provider of margin lending facilities. As one of the leaders in margin lending in Australia, BT has been helping thousands of Australians with their investments for over 30 years.

BT Margin Lending is part of the Westpac Group and a pioneer of margin lending in Australia.

A margin loan is borrowing to invest, using your shares as security for the loan. The margin lender BT Margin Lending determines the amount they will lend on any approved security; this is called a Loan to Value Ratio (LVR). The shares purchased with the Westpac BlueChip20 portfolio provide security for the loan. The amount clients can borrow is determined by both the borrowing limit and credit limit.

An LVR is assigned to each investment in your loan portfolio. The LVR is the percentage of the investment’s market value that we will lend you. For example, we will generally lend between 30% and 80% of the value of approved shares and managed funds.

You will be assessed for your requested credit limit based on your financial position. The credit limit is the maximum your loan can reach, regardless of your borrowing limit.

A borrowing limit is calculated by multiplying each investment's market value by its loan to value ratio (LVR). As the value of your investments changes every day, so does your borrowing limit.

A client can breach their credit limit without exceeding their borrowing limit.

The amount available for further investment at any one time is called your funds available. It is calculated by taking the lesser of your borrowing limit and your credit limit and then subtracting your loan balance.

The investment process begins with an initial contribution (minimum $2,500). These funds are typically drawn directly from your nominated bank account.

Upon receipt of your initial contribution, the first margin loan drawdown occurs. The amount of the initial contribution and loan drawdown will be determined by you and/or your financial adviser.

The combined funds will then be used to purchase shares in the S&P ASX Top 20, in the approximate ratio of their market capitalisation.

For example, if your total initial investment is $5,000 and BHP represents 15% of the S&P ASX Top 20 Index, you will buy BHP shares to the value of $742.50 (after allowing for the minimum 1% cash holding). If Commonwealth Bank represents 10%, you will buy CBA shares to the value of $495 (after allowing for the minimum 1% cash holding).

A cash balance of 1% of your total investment must be retained in the Westpac BlueChip20 cash account. This cash is eligible for interest payments.

From time to time, your share portfolio may be rebalanced to reflect the changing values of the companies in the S&P ASX Top 20, or to retain your 1% cash position. This will be undertaken automatically through the buying or selling of shares within your portfolio. 

You can lodge any additional listed security that is currently on the Australian Stock Exchange (ASX) by completing the Westpac Bluechip 20 Lodging Shares form (PDF 195KB).

When lodging the stock, please note that you must select whether you would like a holding lock to be placed on the stock or not. If you select to put a holding lock on the added security, then the amount of stock will be held and will not form part of the portfolio for rebalancing.

If you don't select to add a holding lock, the stock you have added will be included in the portfolio for rebalancing and depending on the stock and volume, may be sold to the index weighting.

Standard Loan to Value Ratios (LVR) will apply per stock.

Yes, you can suspend your Regular Gearing and Regular Contribution Plan up to 3 months in any 12 month period. 

Otherwise, if your loan balance is $20,000 or above you can cease regular gearing. Once the loan balance decreases below this minimum, you will be required to commence regular gearing again.

In addition, if your gearing ratio (your loan balance as a proportion of your market value) is above 65% you can cease drawing down your loan until such time as the ratio is below this level. 

To suspend you Regular Gearing and Regular Contribution Plan, you need to complete, sign and send the Regular Gearing and Investment  form (PDF 180KB) to BT Margin Lending. After 3 months your existing direct debit and loan draw down amount for your Westpac BlueChip20 investment will recommence.

As soon as your application is approved, we will debit your nominated bank account for your initial contribution. Please ensure you have adequate funds in this account, as you may not receive email notification of loan and investment approval before the direct debit takes place.

Thereafter, the direct debit for your monthly contributions will occur on the 15th day of each month, or if this is a weekend, on the next working day.

Your regular monthly instalment contributions will be debited directly from your nominated bank account on the 15th of each month. Your regular monthly loan drawdown will also occur on the 15th. The combined funds will be used to purchase additional shares. (If the 15th of the month is not a business day, these will occur on the next business day).

Your monthly contribution will be used to buy the shares that your portfolio is the most underweight at the time. This process occurs automatically and ensures that your portfolio reflects, as closely as possible, the performance of the S&P ASX Top 20 Index.

The key benefit of the Westpac BlueChip20 strategy is the ability to constantly accumulate a direct share ownership in Australia's top 20 companies. When the market capitalisation of a company increases and becomes one of the top 20 stocks, it will be automatically purchased for you. The shares in the company it has replaced will be sold, with proceeds reinvested into the new company.

Under the Westpac BlueChip20 structure, you are the beneficial owner of your shares.

There are three available options for the treatment of dividends.

  1. The default option is to have your dividends directed to the interest-bearing cash account linked to your portfolio. The funds will then be reinvested across your share portfolio, subject to maintaining the minimum cash holding of 1% of your portfolio value. 
  2. Alternatively, you can choose to have the dividends paid into the account linked to your SMA account, which for Westpac BlueChip20 is always your margin loan account. If you select this option your dividends will be paid to the loan, effectively reducing your loan balance. 
  3. Lastly, you can have your dividends paid to an external bank account that will not be linked to your BT Margin Loan. If you have an existing account, you can change your current dividend option by completing a Westpac Bluechip 20 – change of Bank Account details form (PDF 209KB) .

You can change your dividend option at any time however you can only choose one of the options at any one time and not a combination of all three. The linked bank account must be your margin loan.

When you take out a Westpac BlueChip20 account, a loan account with BT Margin Lending is established. Your obligation to repay this loan (including interest and fees) is secured over your Westpac BlueChip20 account.

A margin call is triggered when your loan balance exceeds your borrowing limit by more than the buffer allowed. If you get a margin call, you need to bring your loan balance back under your borrowing limit within a short period. The buffer offered by Westpac investment lending is generally 10% of your portfolio market value. This means that small changes in the market or your loan balance will not trigger a margin call.

There are two ways to clear a margin call:

  1. Add more acceptable security, which can include cash
  2. Repay part of your loan.

There are certain fees and charges payable on your Westpac BlueChip20 account.

All these costs are fully explained in the Westpac BlueChip20 Product Disclosure Statement (PDF 1MB).

Buying direct shares in 20 different companies on a regular basis would normally generate significant paperwork. But when you invest through Westpac BlueChip20, all this is taken care of for you.

The cost base of your shares is automatically adjusted with each trade and all dividend payments are recorded and paid to your account. Any corporate actions are automatically actioned and recorded.

Complete and concise records, available online at any time, simplify the preparation of your annual tax return.

Things you should know

General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness and the Westpac Bluechip20 Product Disclosure Statement and the BT Margin Lending Margin Loan Product Disclosure Statement (each a PDS). Each PDS is relevant when deciding whether to acquire or hold these products.

 

Westpac BlueChip20 is a financial product issued by Praemium Australia Limited ABN 92 117 611 784 AFSL No. 297956. The BT Margin Lending Margin Loan is a financial product issued by BT Securities Limited ABN 84 000 720 114 AFSL No. 233722 and Westpac Banking Corporation ABN 33 007 457 141, AFSL No. 233714 (Westpac). Neither product is a deposit with or other liability of Westpac or any other company in the Westpac group of companies. They are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither Westpac nor any of its respective directors, officers, employees, associates, or its subsidiaries guarantee or give any assurance in regard to the capital value, income return or performance of any investment offered in either PDS.