Do you qualify? What is a 'wholesale investor' and who qualifies?
19 August 2017
| Category - Advisory

Do you qualify as a wholesale investor?

Investors who have the financial resources to allow them to take a long-term approach to their investment decisions are often qualified as a “wholesale investor”.

Qualifying as a “wholesale investor” can give you access to a broader range of investment opportunities that are not available to retail clients; including direct property trusts and schemes.

Unlisted property funds like those offered by Stronghold, involve the purchase of a property that will be held in trust for at least 5-7 years before being resold.

Investors in these trusts initially buy units with a value of $1 purchase value = 1 unit. As there is no established secondary market for selling those units, investors are expected to hold the units for the term of ownership.

During the term of ownership, the capital value of the property may increase, and the unit owners can expect to receive an equivalent gain in their unit value at the time of sale.

To qualify as a wholesale investor, a potential Investor needs to obtain a certificate issued by a qualified accountant that verifies they meet one of the four categories summarised below:

  • Make an investment of $500,000 or more in a trust; or
  • If investing less than $500,000, provide a certificate from a qualified accountant, obtained within the prior two years, that he or she has net assets of at least $2.5m or has had a gross income for each of the last two financial years of at least $250,000; or
  • Be a “professional Investor” or a “Sophisticated Investor” (as those terms are defined in the Corporations Act); or
  • Be an “experienced Investor”. An Experienced Investor is a person or organisation that has had significant dealing and exposure to investment particularly related to unlisted property trusts. A prospective Experienced Investor is required to either; complete a certificate detailing occupation/profession, qualifications and investment experience to be qualified by the Trustee or, alternatively, an AFSL Licensee may certify accordingly.

A person (either a natural person or a legal person) who is the subject of a current certificate from a qualified accountant certifying they have a prescribed net asset or gross income level are then able to invest in financial products that do not have a regulated disclosure document – including unlisted property trusts.

“The rationale is that people meeting one of these criteria are more likely to be able to evaluate offers of securities and some financial products (such as interests in managed investment schemes) without needing the protections of a regulated disclosure document.” ASIC Website March 2006

For more information about obtaining a certificate from a qualified accountant CLICK HERE

For more information about SMSF trusts and Wholesale investing CLICK HERE

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