Choiceplus

Like any investment, Choiceplus carries its own level of investment and market risk. When choosing to invest, you should be aware of the risks involved and be comfortable with the strategy you’re putting in place. Here are a few considerations for you to think through before investing in Choiceplus: 

• Level of diversification (concentration risk). Diversification means spreading your investments across different types of assets. By pooling your money into one type of investment, you could suffer from concentration risk – that is the risk of having your money tied up in too few assets as opposed to spreading it across a range of investment types.
•  Short-term price volatility (volatility risk). This refers to uncertainty about the size and frequency of changes in the value of your investments. 
• The consequences of trading too often (frequency risk). When you buy and sell shares, each trade incurs – at the very least – a brokerage fee. If you are continually buying and selling your shares, think about the costs involved and whether you are investing or speculating and if this is the right strategy for you.
• Investing based upon your feelings (emotional risk). Chasing the market and emotionally buying or selling shares may not assist you in achieving your long-term financial and investment goals. If you are continually concerned or wanting to change your mind then perhaps reconsider. 

The following requirements apply to investing in Choiceplus: 

• You need a minimum balance of $10,000 to be eligible to invest in Choiceplus. 
• You need to keep at least $2,000 invested in your other Hostplus investment options at all times. If you’re a Hostplus Pension member, you may need to keep more than this in your other investment options, depending on the minimum annual pension payment that Hostplus must pay you throughout the year. This is known as the income payment reserve (IPR). 
• You need to make an initial Choiceplus investment of at least $200.
• You need to maintain at least $200 in your Choiceplus transaction account and, in addition, must also have enough money in your transaction account to make your investments.
  
  

As long as these requirements are fulfilled, you can invest as much of your remaining Hostplus account balance in Choiceplus as you’d like. However, the following restrictions apply: 

• You can invest as much of your account balance in term deposits as you’d like, up to a maximum of $5 million in a single deposit. The minimum amount you can invest in a term deposit is $1,000.
• You can invest up to 80% of your account balance in S&P/ASX300 shares, ETFs and LICs.
• You can invest a maximum of 20% of your account balance in a single stock.
• You can invest a maximum of 20% or 50% of your account balance in a single ETF or LIC. For details of the applicable limits, refer to the list of ETFs and LICs.
• The minimum buy order you can place for shares, ETFs and LICs is $1,500. 
• The maximum amount that can be invested per security trade purchase is $250,000. 
• You cannot buy and sell the same share, ETF or LIC on the same day. 
• Stop losses and stop gains are not available.

You cannot automatically direct future contributions into Choiceplus. However, you can make a transfer request. This allows you to transfer funds from other Hostplus investment options into your Choiceplus transaction account at any time. 

• Cost: Choiceplus offers many of the advantages of an SMSF, but without the high costs and administrative burden associated with an SMSF. 
  
• Paperwork: SMSF members usually must also become trustees of their fund. The trustees are responsible for meeting the Australian Taxation Office (ATO) regulations and requirements, which can be quite complex, time-consuming and onerous. With Choiceplus, Hostplus is the trustee and takes care of administration, compliance and reporting requirements – so you don’t have to.
• Investments: Choiceplus allows you to tailor your investment strategy by selecting your own investments from S&P/ASX 300 Index shares, ETFs, LICs and term deposits. However, unlike SMSFs, Choiceplus does not allow investment in direct property or other assets, such as collectibles.
• Protection: You also continue to be invested in an APRA–regulated super fund, with all the prudential protections that this provides. An SMSF does not offer the same protections. 

Funds in your transaction account are invested in a Hostplus cash account with ME Bank. ME Bank is 100% Australian-owned and is an APRA–regulated bank. 

Cash transfer requests that have been received before 4pm AEST will be available two business days later. 

 You must maintain at least $200 at all times in your transaction account. The platform will automatically manage this minimum from any interest or dividend income you receive, or from the proceeds of any share, ETF or LIC transaction. 

If, however, your account does fall below $200, we’ll contact you to top up your account. If you haven’t topped up your account after 30 days and you hold any shares, ETFs, LICs or term deposits, we’ll attempt to contact you again. If you do not take any action to bring your transaction account up to at least $200, we’ll take the following steps to bring your minimum balance up to $200 by 12pm of the last business day of the following week.  

The steps, in order, we’ll take are as follows: 

1. We’ll transfer $200 from your other Hostplus investment options if the balance in the other investment options is above $2,200. If you have a pension account, the amount you have in your other Hostplus investment options may need to be more than $2,200 to ensure your pension payments are covered; this is known as the income payment reserve. 
2. If you have less than $2,200 – or, if you’re a Hostplus Pension member and you have less than the income payment reserve – we’ll sell $200 worth of shares from your highest market value share, ETF or LIC holdings. You’ll be responsible for the brokerage fees and any capital gains tax (CGT) that may be due. This transaction will take place between 2pm and 4pm on the business day after the notice has expired and will be placed at market value. Hostplus will not have any regard to the market price of the share, ETF or LIC when this transaction takes place. 
3. We’ll redeem term deposits with the earliest maturity date. Penalties will apply. 

The interest rate payable on your transaction account balance is subject to change and the current applicable rate is available on the Choiceplus platform. As at 1 April 2023, the interest rate payable is 4.40%. Interest on your transaction account is accrued daily and is credited to your account monthly. It’s credited in arrears and net of any applicable tax.

There are no fees when you place a term deposit order. 

Your interest will be credited to your transaction account at the date of maturity. 

Investments in term deposits are placed on a Friday (or the next business day if the Friday falls on a public holiday). You can request investment in a term deposit at any point during the week before 11.59pm AEST/AEDT on a Thursday. If your request is received after this time, it will take effect from the following Friday.  

If you want to cancel a term deposit, you have until 11.59pm AEST/AEDT on the Thursday after you place the term deposit order to cancel your request without incurring any penalties.

Applications to redeem a term deposit before it matures will only be granted in limited circumstances. These are:

• payment of Total and Permanent Disability (TPD) insurance benefit
• payment of a terminal illness benefit 
• payment of a death benefit
• payment under financial hardship grounds
• payment under compassionate grounds, or under the order of a court of a relevant government agency (i.e. ATO, Attorneys General, APRA or ASIC). 
  
  

If you meet one of the above criteria and you or your beneficiaries redeem your term deposit before the maturity date, the interest rate will be reduced as follows:

• If the term deposit has been invested for 0 to 50% of the total term, the interest rate will be reduced by 50%. 
• If the term deposit has been invested for more than 50% of the total term, the interest rate will be reduced by 20%. 
  

Choiceplus allows you to specify reinvestment preferences on a term deposit at the time you place the initial order, or at any time during the term up to two days before the day of maturity. 

The reinvestment options are:

• reinvest the principal only, or the principal plus net interest 
• purchase a term based on the same term and same provider as the maturing term deposit, or based on the same term and best rate 
• reinvest only, or reinvest using these preferences until cancelled.  

On the day of maturity, the principal plus net interest will be deposited into your transaction account and a new order will be created based on your reinvestment preferences. 

The term deposits available through Choiceplus are not covered by the Financial Claims Scheme guarantee, as they are not held in separate trust for each individual member. 

The Financial Claims Scheme only applies to super fund members if the trustee holds bank deposits with an approved authorised deposit-taking institution (ADI) on separate trust, which it treats as different ‘account holders’. Hostplus pools together all the term deposits placed each week for each term deposit issuer to minimise the cost to members.  

You can invest up to 80% of your Hostplus account balance in ETFs, shares, and LICs, and a maximum of 20% of your account balance in a single share.

If your holding reaches above 20% for a single share or 80% of your total balance in shares, ETFs, and LICs, you will not be required to liquidate any position to keep within these rules. However, you may not be able to purchase other shares, ETFs, or LICs until your holding is below 80% of your total account balance.

If your holding exceeds 20% for a single share (i.e., due to market movement), you will not be restricted from purchasing additional securities as long as your total balance in shares, ETFs, and LICs does not exceed 80%. However, you will be restricted in purchasing any additional shares in the company that is in excess of the investment limit.

The minimum buy order you can place for shares is $1,500. You cannot buy and sell the same share on the same day.

You cannot currently transfer shares you already personally own into your Choiceplus account. 

When you place your buy order, you can select whether you want your order to be valid for the day or for 30 days. This is called the ‘expiration period’. 

If you choose ‘good for the day’, Hostplus will attempt to execute your order on the day the order was requested. If all, or part, of your order is unable to be executed on that day, your order (or part of your order) will expire.  

If you choose ‘good for 30 days’, Hostplus will attempt to execute your order within 30 calendar days from the date of your order request. If all, or part of, your order is unable to be executed within that period, your order (or part of your order) will expire.  

For all limit and market orders which are not fully executed in the same trading day, normal brokerage will be charged for the total portion executed each day. 

Yes, you can cancel or change trades that have not been fully executed. 

You can choose from a selection of Australian and international ETFs.

The ETFs on Choiceplus have been selected by Hostplus based on recommendations from Lonsec, a specialist investment research house and the leading provider of quality managed fund and ETF research in the Australian market.  The minimum buy order you can place for shares is $1,500, including brokerage. You cannot buy and sell the same share on the same day. 

Yes, you can cancel or change trades that have not been fully executed. 

You can invest in a range of LICs. The LICs offered on Choiceplus have been selected by Hostplus based on recommendations from specialist investment research.

Yes, you can cancel or change LIC orders that have not been fully executed. 

The Choiceplus investment option can carry capital losses forward, which may provide you with tax benefits. A capital loss occurs when an asset loses value in between buying and selling it. Although capital gains must be realised and taxed each year, capital losses can be carried forward to be offset against future gains.  

Choiceplus allows you to carry forward any realised capital losses in relation to the sale of shares, EFTs and LICs to be offset against future gains. These are included in the calculation of the current year’s net capital gain (or loss) calculations. 

Shares can provide tax benefits to shareholders in the form of franking credits, which are also known as imputation credits. Franking credits are attached to dividends and apply to the amount of tax a company has paid on its profits. Australian companies pay tax at a rate of 30%, which is the maximum franking credit investors can receive. 

Super funds pay a maximum tax rate of 15% on income from investments, although pension accounts are not subject to tax. Any dividends that have been taxed at a rate higher than 15% will return a franking credit to you. The franking credit is equivalent to the difference between the superannuation fund tax rate and the tax rate paid by the company.   

Franking credits are credited back to your account and can help to improve net investment returns. They’ll either be added to your transaction account or reinvested, if you have selected that option.  

The following examples show how franked dividends can provide a tax benefit. 

Example 1: An unfranked dividend of $70

1. Calculate income: 

• Unfranked dividend income: $70 
• Total dividend income: $70 
• Taxable income: $70 
   

1. Multiply taxable income by 15% to calculate tax withheld:  

• Tax withheld/refund received: $10.50 
  
  

1. Deduct tax withheld from total dividend income to calculate net dividend income: 

• Net dividend income: $59.50
  
  

Example 2: A fully franked dividend of $70 

1. Calculate dividend income: 
   

• Fully franked dividend income: $70
•  Total dividend income: $70 
• Franking credit: $30  
   

1. Add fully franked divided income to franking credit to calculate taxable income: 

• Taxable income: $100  
  
  

1. Multiply taxable income by 15% and deduct franking credit to calculate tax withheld:  

• Tax withheld/refund received: $15  
   

1. Add tax withheld to total dividend income to calculate net dividend income: 

• Net dividend income: $85 
  
  

Example 3: A partially franked dividend of $70 

1. Calculate dividend income: 

• Unfranked dividend income: $40 
• Fully franked dividend income: $30  
  
  

1. Add fully franked dividend income and unfranked dividend income to calculate total dividend income: 

• Total dividend income: $70 
• Franking credit: $10  
  
  

1. Add franking credit to total dividend income to calculate taxable income: 

• Taxable income: $80  
   

1. Multiply taxable income by 15% then deduct franking credit to calculate tax withheld: 

• Tax withheld/refund received: $2  
  
  

1. Add tax withheld to total dividend income to calculate net dividend income: 

• Net dividend income: $68
  

Your account includes access to a standard suite of news and market summary information from Morningstar. This includes access to key fundamental analysis ratios for local and global companies, including revenue, earnings, dividends, return on assets, income, profitability and valuations. 

You’ll receive alerts and emails via the Choiceplus online platform advising you of any corporate actions you need to be aware of, as well as dividend payments that are relevant to your investments.  

You’ll also receive alerts for listed investments that are on your watchlist. 

The following reports can be downloaded from the Choiceplus platform:

• Portfolio valuation report: Provides a breakdown of the current valuations of your cash, term deposits, shares, ETFs, LICs and other investment options. It also includes a consolidated valuation of your entire portfolio. 
• Cash transaction report: Details transactions from your transaction account for a specified date range. 
• Fees and expenses report: Details fees and expenses such as administration fees, brokerage, and data services for a specified date range. 
• Dividend report: Details dividends paid on your share portfolio for a specified date range. Includes franked and unfranked dividend income, franking credits, tax withheld and net dividend income. 
• Unrealised capital gains and tax report: Details unrealised capital gains and capital losses for your share portfolio for financial year periods. 
• Capital gains disposal and tax report: Details realised capital gains and unused realised capital losses on share sales for financial year periods.