Self-Funding Instalments (SFIs) are instalment warrants that use any dividends paid on the underlying share to reduce your final instalment amount. Like other instalment warrants, they give you exposure to an underlying share for a portion of its current price. During the life of the instalment, any dividends and franking credits are used to pay off the remainder of the share price. Then, when the warrant matures, you can choose to pay the remainder of the final instalment and take ownership of the share, roll over into a new warrant series, or end the investment and receive any residual value.
Some SFIs also have a stop loss feature that ensures you won’t lose more than your initial investment if the value of the underlying share falls. It is important to note that if the stop loss level set by the warrant issuer is breached, trading in the SFI will cease. Unlike traditional instalments, Stop loss SFIs will also incur funding costs daily, rather than annually.