Dollar cost averaging
|Trying to predict the best time to enter the market is near impossible. Dollar cost averaging (DCA) is one useful technique that aims to take the guesswork out of when to invest. It works by investing at regular intervals and averaging out the cost of the units you buy in a fund over time. This may help manage and spread the risk of investing.|
How it works
|To establish a DCA facility, members simply nominate an amount they would like to invest from the Cash Account on a regular basis and we will purchase managed investments according to their standing additional investment instructions. You must ensure there are sufficient funds in the Cash Account, as funds for the DCA facility will be drawn from the balance of the Cash Account.|
|Weekly - switch will occur on Monday*|
Monthly - switch will occur on the first Monday* of every month
Quarterly - switch will occur first Monday* of each quarter
|The nominated amount must be greater than $100 (per frequency). There is no maximum.|
|Duration of the DCA facility|
|A member can nominate a start date and end date (optional). If no start date is nominated, the next available processing date will apply. A member can also nominate the number of instalments (optional) that their DCA facility will run, after which time it will cancel.|
|You do not need to provide separate instructions for DCA. The member's standing additional investment instructions will be used. If a member changes their instructions while a DCA facility is in place, their new instructions will apply.|
|If term deposits, cash management trusts, along with closed, frozen or illiquid funds are part of a member's additional investment instructions, DCA will not operate. If one of these investments become part of a member's instructions, the DCA facility will be cancelled.|
|A member's DCA facility may also be cancelled for one of the following reasons:|
- full benefit payment
- in-specie transfer out
- insufficient funds available in the cash account
- an ongoing investment becomes closed, frozen or illiquid
- an internal transfer is processed
- rebalancing is elected.
|* Switch occurs on Monday, going to market on the Tuesday. If Monday is a public holiday, the switch will occur on the next available Monday.|
DCA and automatic rebalancing
|DCA will not work in conjunction with rebalancing. If a member requests a DCA facility and they have a rebalance instruction on their account, the rebalance instruction will be cancelled.|
Alternatively, if a member has a current DCA instruction and they subsequently request a rebalance instruction, the DCA instruction will be automatically cancelled.
DCA and cash account top ups
|When cash account top ups occur, DCA will not be included as part of the cash account top up. You will need to keep in mind that fees, taxes, insurance premiums and regular withdrawals (if applicable) are also deducted from the cash account. The cash account top up, which occurs quarterly in January, April, July and October, will exclude the DCA amount when calculating the amount required to maintain the minimum cash account limit.|
Start date examples
- The member nominates a weekly frequency and a start date of 6 April 2010 (Tuesday).
- The DCA application form is received on 5 April 2010 (Monday) - does not meet the minimum two-day processing requirement.
- The first instalment date will be 12 April 2010 (Monday).
- The next due date will be 19 April 2010 (Monday).
- The member nominates a monthly frequency and a start date of 27 May 2010 (Thursday).
- The DCA application form is received on 27 May 2010 (Thursday) - meets minimum two-day processing requirement.
- The first instalment date will be 7 June 2010 (Monday).
- The next due date will be 5 July 2010 (Monday).
- The member nominates a quarterly frequency and a start date of 30 July 2010 (Friday).
- The DCA application form is received on 30 July 2010 (Friday).
- As this application was received outside of the two business day processing requirement, the first instalment date will be 6 September 2010 (Monday).
- The next due date will be 6 December 2010 (Monday).