SEPARATELY MANAGED ACCOUNTS (SMA)
SMA Model Portfolios are similar to unit trusts in that an investment manager develops a model portfolio specialising in a particular aspect of the market (such as large-cap growth or value) and purchases or sells securities in an effort to generate positive returns. The key difference between unit trusts and SMA Model Portfolios is that, in a separate account, the SMA platform is purchasing the securities in the portfolio on behalf on the investor, not on behalf of the fund. In a separate account model, the investor directly owns each of the securities that the model owns. If a separate account portfolio model includes shares of Company 1 and shares of Company 2, when you invest in that model portfolio, the SMA platform purchases shares of each of those companies on your behalf. Your account is "separate" and distinct from that of any other investor in that model.
We are the investment manager for following 3 SMA Model Portfolio products:
Separately Managed Accounts (SMAs) are investment accounts that are structured such that the account holder maintains direct ownership of the portfolio's investments but the account is managed by an investment adviser in accordance with a set investment strategy (model). In an SMA program, each investor's account is managed in exactly the same way (based on the SMA model portfolio/strategy) but each investor's account is held separately. So, unlike a unit trust structure, the capital contributed by each of the investors is not pooled together.
Separately Managed Accounts bring with them some significant structural advantages :
Control
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Investors retain beneficial ownership of the underlying assets in the portfolio rather than units in a fund
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Investors may terminate the manager and leave the scheme without being forced to liquidate the positions and incur tax events
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The underlying assets are generally portable or transferable GST free
Greater Transparency
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Transparency in structure allows assessment of the manager’s transactions, holdings, tax efficiency, fees & expenses, and sources of return
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Investors have online access to their portfolio at all times and can see exactly how it is being managed
Fees & Charges
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Investors can take advantage of wholesale brokerage rates & generally the total expense ratio is lower than that of a managed fund
Tax Advantages & Income
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As investors retain beneficial ownership of the underlying stocks they are eligible for dividends & franking credits
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There is no embedded tax liability within an SMA structure and investors do not realise tax consequences as others enter or leave the scheme. As assets are not pooled, the actions of other investors do not affect all investors.
Compliance
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The legal structure of SMA’s vary but compliance and oversight is similar to that of a managed fund
Size
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Low minimum investment enables investors to diversify across a wider range of stocks compared with buying a portfolio directly