Merrill Lynch Equities is offering Australian retail investors a direct Australian share portfolio on a geared monthly investment plan.
BlueChip20 provides a platform for direct investment in Australia's ASX Top 20 S&P Index stocks on the geared plan.
According to Merrill Lynch head of Equity Margins Mitchell Hurley, this is the first offering of its kind in Australia, despite instalment gearing into managed funds having been around for years.
All reporting is web-based with investors able to track their share portfolio performance via the internet, while all tax reporting for capital gains and dividend payments are itemised on a web based reporting system.
"We have effectively done away with the reams of paper flow which a portfolio comprising 20 different shares would normally generate," Hurley said.
Investors require an initial minimum investment of $10,000 split between a start up equity contribution of $5000 from the investor, which is matched by a minimum start up loan of $5000.
The cost of buying $10,000 worth of shares spread over the 20 different companies is $5 which equates to a brokerage rate of 0.05 per cent, with the minimum monthly investment $500 after that, again matched with a minimum loan drawdown of $500.
Shares are purchased in proportion to their respective weightings in the Top20 index, giving investors the ability to track the performance of their investments against the index.
"The concept is expected to appeal to all investors but especially to those new investors who are cashflow rich and asset poor, who may also feel that direct share investment is only for experienced investors." Merrill Lynch Australia chief executive Paul Masi said.
The service charges a 0.60 per cent per annum platform fee on portfolio value, brokerage costs on share purchases of 0.05 per cent and a current loan interest rate of 8.99 per cent per annum.
Advisers may charge up to 1 per cent per annum fee for arranging and advising on the product's suitability, but there are no management fees.
