Sequoia Launch
Series 65

The Index tracks a dynamic basket of alternative managers subject to a 5% volatility target with dynamic allocation services provided by the Alternative Investments & Manager Selection (“AIMS”) Group of the GS Asset Management Division (“GSAM”). It aims to offer an attractive risk adjusted return over the medium term with low and ideally negative correlation with traditional risky assets such as equities during times of crisis.

Goldman Sachs’ Dynamic Alternative Strategy (“Index”)

The Index tracks a dynamic basket of alternative managers subject to a 5% volatility target with dynamic allocation services provided by the AIMS Group of the GSAM. The current list basket of managers included within the basket including their weight allocations before application of the 5% volatility target is outlined in the table further below. The objective of this Index is to leverage the hedge fund expertise of GSAM.

Risk Management inside the Index

On a daily basis, in order to limit negative performance in extreme market conditions, a risk control mechanism is used inside the Index. It ensures that the volatility of the Index will remain close to the 5% target by reducing the Index’s exposure to the underlying basket of alternative managers in situations where the volatility of the portfolio exceeds 5%. The maximum level of exposure is 100% and the minimum level of exposure is 0%.

It might be helpful for investors to be aware that it is because of the risk management included inside the Index targeting 5% realised volatility that the Issuer is able to offer a relatively low interest rate of 3% p.a. in connection with a 100% limited recourse loan. This is because the cost of the hedge obtained from the Hedge Provider is much lower than it would otherwise be if the Index did not include the above risk management feature targeting a realised volatility of 5%.

The volatility control mechanism may provide some protection against decreases in the basket of alternative managers comprising the Index however it may also limit the Index’s (and the Unit’s) exposure to increases in the basket of alternative managers comprising the Index.

Summary of the key features

Downloads

To find out more, and to download a copy of the Term Sheet PDS and Master PDS, please click on the links below

Key risks include:

• Risk of 100% loss in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. A 100% loss will occur if there are no Performance Coupons paid during the Investment Term. This will be the case if the Index Performance is less than or equal to zero on each of the Performance Coupon Dates;
• Risk of partial loss (i.e. less than 100% loss) in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. Investors may incur a partial loss if the total of all Performance Coupons received during the Investment Term is less than the Break-Even Point;
• Timing risks. The timing risk associated with Series 65 is significant. This is because the Investment Term is fixed and the total of Performance Coupons received during the Investment Term needs to exceed the Total Investment Cost by the time the Maturity Date arrives in order for the investor to generate a profit from their investment (ignoring any Upfront Adviser Fee and any external costs). If this does not occur by the Maturity Date then Investors will generate a loss;
• The potential Performance Coupons are determined by reference to the Index Performance as well as changes in the AUD/USD exchange rate as at the relevant Performance Coupon Date. An increase in the AUD/USD exchange rate between the Commencement Date and the relevant Performance Coupon Date will reduce the relevant potential Performance Coupon payable (if any) whilst a decrease in the AUD/USD rate between the relevant dates will lead to an increase in the relevant potential Performance Coupon payable (if any). As such, whether or not you break-even depends on both the Index Performance and the AUD/USD exchange rate performance during the Investment Term;
• Volatility and exposure risk – the volatility control mechanism used by the Index means that if there is high volatility in the Basket of Alternative Managers (“BAS”) during the Investment Term there is a risk the Index will have little to no exposure to this BAS during some or all of the Investment Term, which may provide some protection against decreases in the prices of the BAS comprising the Index however it may also limit the Index’s (and the Unit’s) exposure to increases in the prices of the BAS comprising the Index. To the extent the Index has an exposure primarily to cash as a result of the volatility control mechanism, the Index will be unlikely to generate the Index Performance required for investors to generate a profit;
• There is no guarantee that the Units will generate returns in excess of the Prepaid Interest and Fees, during the Investment Term;
• Additionally, in the event of an Investor requested Issuer Buy-Back or Early Maturity Event, you will not receive a refund of your Prepaid Interest or Fees. The amount received will depend on the market value of the Units which will be determined by many factors before the Maturity Date including prevailing interest rates in Australia and internationally, foreign exchange rates, the remaining time to Maturity, and general market risks and movements including the volatility of the Index. Investors should be aware the Units are designed to be held to Maturity and are not designed to be held as a trading instrument;
• Gains (and losses) may be magnified by the use of a 100% Loan. However, note that the Loan is a limited recourse Loan, so you can never lose more than your Prepaid Interest Amount and Fees paid at Commencement.
• Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty; and
• the Units may mature early following an Early Maturity Event, including an Adjustment Event, Market Disruption Event or if the Issuer accepts your request for an Issuer Buy-Back.
• Please refer to Section 2 “Risks” of the Master PDS for more information.

Units in Sequoia Launch Series 65 are issued by Sequoia Specialist Investments Pty Ltd (ACN 145 459 936) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN 135 907 550, AFSL 341506) (the “Arranger”). Investments in the Sequoia Launch Series 65 can only be made by completing an Application Form attached to the Term Sheet PDS, after reading the Term Sheet PDS dated 9 November 2022, the Master PDS dated 17 August 2017 and Target Market Determination (for retail investors) and submitting it to Sequoia. A copy of the Termsheet PDS, Master PDS and Target Market Determination can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master PDS’s as well as the Target Market Determination before deciding whether to invest in Units in Sequoia Launch Series 65. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS.