Page 1 - SMA changes rationale_Specialist Income (Moderate, Balanced and Assertive)

SMA Portfolio Change

Specialist Income SMA (Moderate, Balanced and Assertive)

Hybrid Replacement - SUNPG

As at 27 June 2024

Below is a summary of the recent change to your portfolio:

Hybrid securities typically have maturity dates where they can be converted to a different asset
class or redeemed. The hybrid security – Suncorp Capital Notes 2 (SUNPG) investment within
the Specialist Income portfolios recently matured and has been redeemed. We have replaced
it with a Van Eck ETF.

Redeemed:

On 17 June 2024, Suncorp Capital Notes 2 (SUNPG) reached their first call date and was
redeemed by Suncorp. Each unit was redeemed for a par value of $100, along with a final
distribution of $0.5219.

Purchased:

Historically we have replaced matured hybrids with another hybrid option. Hybrid spreads have
tightened to low levels. Despite the attractive current yield, hybrids currently look expensive
relative to the risk they carry to other fixed income and bond options. We are also conscious
of changing liquidity conditions in this part of the market and the impact trading may have on
returns. For this reason, we have replaced SUNPG with the VanEck Australian Subordinated
Debt ETF (SUBD).

Description:

SUBD is an ETF which invests in a portfolio of subordinated bonds, with the aim of providing
investment returns before fees and other costs that track the performance of the iBoxx AUD
Investment Grade Subordinated Debt Mid Price Index. This provides investors with exposure
to a portfolio of regulatory Tier 2 Capital investment grade credit subordinated floating rate
bonds. These are similar to hybrid securities but are higher ranking in the issuer’s corporate