Divestment

The Mason Stevens Global Investment Service has a divestment cash management process which occurs on the fifth business day of every month.

If an account’s minimum cash balance falls below the required minimum in the Self Directed Portfolio, a system generated sell-down of assets or cash transfer between portfolios will be triggered to top-up the cash balance to the minimum required balance (this will differ between each account).

On the first business day of each month you will be notified by an ‘Alert’ if your client’s account is below the minimum amount specified below, there is also a reminder on the Adviser dashboard. If your account falls below the specified amounts on the fifth business day of each month, divestment will occur on your client’s account.

There is a grace period where accounts less than 90 days old are not subject to divestment.

Investment 

If an account’s balance falls below $500 of total FUM, divestment will top up the cash balance to $2,200

Super (Accumulation)

If an account’s balance falls below 1.5% of total FUM, divestment will top up the cash balance to 2.2% (ceiling of $15,000)

TTR & Pension

If an account’s balance falls below 4.5% of total FUM, divestment will top up the cash balance to 5.2% (ceiling of $15,000)

Please use the Cash Balances report to assist with cash management of your client’s accounts should you wish to avoid divestment.

Divestment: Sell-down process

Step 1:

Check for unsettled inflight AUD Equity sell trades from Self-Directed Portfolio (SDP). If this does not cover the gap, Step 2 occurs.

Step 2:

Look to free up cash from a combination of currency and moving cash from the SDP and managed portfolios.

1.Convert currencies from the primary SDP (largest to smallest)

2.Sell equities from SDP’s (largest to smallest positions)

3.Sell international equities from SDP’s (largest to smallest)

4.Transfer AUD cash from managed portfolios (largest to smallest positions)

5.Convert currencies from managed portfolios (largest to smallest positions)

Please note – In Steps 4 & 5, the divestment strategy does not automatically sell down from managed portfolios. Subsequent rebalances are managed with discretion by the SMA team.

Step 3:

After the monthly divestment algorithm runs, Mason Stevens will identify any accounts that remain in a ‘divestment state’ which is managed through a controlled sell-down.