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Investor Education > Separately Managed Accounts > Why are SMAs unique?

WHAT MAKES A SEPARATELY MANAGED ACCOUNT UNIQUE?

Separately managed accounts (SMA) have some key differences and advantages to owning units in a managed fund or owning shares directly. Like any class of investment product, separately managed acocunts can vary significantly in the features they offer, so it is important to read the product disclosure statement for full details. Some critical features include:

Transparency
Your separately managed account portfolio can be invested across a number of models within the separately managed account or a single diversified model like the ASX BlueChip20 model. All your holdings are merged so that they are visible in a single portfolio online. The number of models available to invest in depends on the SMA provider.

Portability
Withdrawing from a separately managed account can be done with cash or securities – or a combination of both. You can minimise Capital Gains Tax (CGT) by transferring the stock in-specie from your SMA into your name without selling and realising any capital gains on the stock (some restrictions may apply).

Netting
Netting of transactions is unique to separately managed accounts and eliminates unnecessary trading by offsetting buy and sell trades in a stock so that only the net position is traded. For example 2 model portfolios within the SMA each hold XYZ Company shares, if one model reducing its holding and the other increasing by the same amount this will not result in a transaction.

Blending
Holdings in a number of models can be merged so that they are displayed as a single portfolio for convenient viewing. Blending can also take full advantage of netting during trading time which may provide brokerage cost savings.



This table below compares the features of a separately managed account with managed funds and direct equities.

Feature SMA Managed fund Direct equity
Professional fund management     
Immediate application and redemption of funds     
Traded every day   
Wholesale execution     
Low minimum investment     
Corporate actions administered    
Tax reporting     
Access via product disclosure statement      
Fee transparency   
Ability to view underlying shares   
Equitable performance fees     N/A
MInimise CGT when switching    N/A
In specie transfers   
Avoid embedded CGT     
Automatic tax optimisation     
Netting of transactions     
Netting of transactions     
Blended individual portfolio     
Select minimum trade size   
Exclude stock from portfolio   
Download tax parcels for accountant    

 

Separately managed account model portfolios

 

Investments

Australian shares
International shares
Property
Fixed income
Cash

 

Investment products

Managed Funds
Managed Accounts
Superannuation Funds
Wrap Accounts
Insurance Bonds

Strategies

St George Margin Lending
BT Margin Lending
Investment Bond
Sophisticated Investor Opportunities
Self Managed Super Funds

Fund managers

Colonial First State
Perpetual Wealthfocus
BT Investment Funds
MLC Masterkey
Spectrum Super

Australian Fund Managers

Investor Education

Managed investments
Superannuation
Separately managed accounts
Wrap accounts

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