Benefits of investing in the BlackRock GSS Australian Bond Index Fund

Indexing

The Underlying Fund is managed as an index fund. Index funds are designed to provide an investment return that matches or is similar to the investment return of a particular market index. Market indices measure the performance of particular types of investment. Often, they measure the performance of shares and other investments listed on a stock exchange. Currently, the market index chosen is the Bloomberg AusBond Composite 0+Yr Index.

Index funds have a number of advantages:

• clarity of investment objective - the investment objective of an index fund is easy to understand - it is to mirror as closely as possible the return of the chosen index;

• ease of measuring objective - the performance of the fund in achieving its investment return objective is transparent because the fund's performance is easy to compare with the index's performance;

• lower operating costs - index funds do not require the same level of investment analysis and stock selection as active funds because their investments mirror the chosen index. This reduces the costs of investment management of the funds;

• lower transaction costs - as index funds hold the investments that make up a market index and as these investments generally only change slowly over time, there are usually less costs of buying and selling investments;

• taxation efficiency - as index funds typically do not buy and sell investments as often as actively managed funds and as they generally hold investments for longer, they can have fewer realised tax liabilities for investors; and

• diversification - as index funds have an exposure to all or many of the investments that make up a market index, they are usually highly diversified which means that investors are less exposed to the performance of individual investments.

The disadvantage of index funds is that they will likely not outperform the chosen index.

Access to professional investment managers

By investing through one or more Underlying Funds, the Fund gives you the benefit of access to the professional investment managers who operate those Underlying Funds.

Pooling of investors' funds

The pooling of a number of investors' funds assists the investment manager of the Underlying Fund in implementing its indexing strategy efficiently.

A simple way of investing and switching your investment

The Fund provides a simple way of investing through your platform account and allows you to withdraw your investment when you wish to. Generally, by giving us directions through your platform account, you can withdraw your investment in the Fund at any time, as described in section 2 of the PDS. You can also give us directions to switch your investment to other funds available through your platform account if you decide you wish to change your investment in the future (see section 5 of the PDS).

Online information about your investment

As an investor in the Fund through a platform account, you have online access to obtain information about the investment.

Risk level

Medium

Investor suitability

Long term investors seeking a broad exposure to Australian bonds.    

Investment strategy

To invest in or otherwise provide an exposure to the securities comprising the Benchmark Index in a way that replicates the performance of that index. Generally, this is done by the Underlying Fund (either directly or through one or more other funds) purchasing all of the securities that form the index, although derivatives such as futures, forwards and options may be used in certain circumstances to provide part of the exposure. The investment strategy is implemented by investing through the Underlying Fund.

Investment return objective

The Fund's objective is to provide investors with the performance of the market, before fees, as measured by the Benchmark.

The investment return objective is expressed before the deduction of management fees, expense recoveries and taxation, i.e. performance is measured relative to the benchmark before fees, costs and taxes are deducted.

The investment return objective is not intended to be a forecast of actual performance; it is merely an indication of what is aimed to be achieved over the investment time horizon. Netwealth does not guarantee that the Fund will achieve its investment return objective.

How we invest your money

Currently the Fund is invested in the iShares Australian Bond Index Fund (ARSN 097 295 424) managed by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975. BlackRock Investment Management (Australia) Limited has given and has not withdrawn before the preparation date of the PDS, its written consent to be named in the PDS as the manager of iShares Australian Bond Index Fund in the form and context in which it appears in the PDS.

Strategic asset allocation

The Fund is intended to be exposed to all the securities in the Benchmark Index. Therefore, it does not have a pre-determined asset allocation but instead seeks exposure to assets matching the composition of that index by investing in the Underlying Fund.