Sign up for updates

Investor Education > Wrap Accounts > Why invest in a wrap account?

WHY INVEST THROUGH A WRAP ACCOUNT?

Wrap accounts can provide significant advantages to investors wishing to simplify their investments and their administration. Some of the advantages of wraps account are:

Consolidate all of your investments in one place
Wrap accounts allow investors to access managed funds, ASX listed shares, cash and margin lending through a single account. Online access to view reports on consolidated holdings make it quick and easy to manage a portfolio, and to view the performance of individual assets as well as the portfolio as a whole. A single consolidated tax report is also received at the end of each year, providing potential savings on accounting fees.

Access to wholesale
Many wholesale and institutional funds are not usually accessible to retail investors due to restrictive minimum investment amounts that can be anywhere from $200,000 to several million. Once an investor has opened a wrap account, it is only necessary to meet the minimum per holding investment amount of the wrap platform - typically $1,000 - irrespective of the high minimum investment amount the investment fund requires from direct investors.

Diversification
Most wrap accounts offer an extensive range of investment choices allowing investors to diversify across and within asset classes, as well as across different equity styles. As investors do not need to meet the minimum investment amounts required from direct investors in wholesale and institutional funds, they are able to more effectively diversify their portfolio across multiple funds and securities, potentially reducing overall portfolio risk.

Access to boutique investments
Many new and existing boutique investments are only accessible through wrap accounts.

Simpler investing
The table below summarises some of the benefits of investing via a wrap account versus investing directly with the fund manager.
 

Investing directly Investing through a wrap account
You normally only have access to retail managed investments with generally higher fees Most funds available through wrap accounts are wholesale funds which generally have lower fees than retail funds.
Separate reports are received from different investment managers about your investments and transactions You receive a consolidated report with information about your investments and transactions.
Distributions and income are paid to you separately from each of your investments. Distributions and income from your managed investments may be paid to your cash account or reinvested.
You may have to pay entry and exit fees when you switch between investments. You pay no entry and exit fees when you switch between investments.
Time to complete purchases is dependent on the procedures of the investment managers. Time to complete purchases and sales is dependent on IDPS procedures and those of the underlying investment managers.
You receive notices and other communications directly from the investment managers. Notices and other communications are not sent directly to you.
You must complete applications for each investment. You only need to complete one application to open the wrap account, and then you are buy and sell funds and shares.
You must instruct each investment manager separately to rebalance your portfolio. You can balance your total portfolio with one instruction.

Investing in a wrap account - avoid unnecessary fees

Using the wrong wrap account can prove to be an expensive option as an adviser may add entry fees and adviser service fees which undermine the cost effectiveness of accessing wholesale funds. If you already have a wrap account, chances are you’ve purchased it through an adviser. To avoid paying unnecessary adviser fees you should pay a separate professional fee for financial advice and execute your own investment transactions on a wrap account you can access directly. You may be able to ‘in specie’ transfer your investments to a more cost effective account without selling the investments. 

 

Portfolio administration solutions - wrap accounts

 

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

PRIVACY POLICY  |  TERMS & CONDITIONS SITEMAP

© 2020 DIRECTINVEST 2016   |  A member of Mason Stevens Group |  ABN 89 069 774 456 

Corporate Authorised Representative AR No 336649  | Financial Services Guide