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One of the main ways that a wrap platform will differ from a master trust relates to transferring assets held in the account. With master trusts, the underlying funds (investment options) are specific to that master trust, and if you owned units in a fund through master trust A, you would not be able to transfer these to master trust B. Instead you would have to sell the underlying investments in one product and repurchase them in the other product resulting in a capital gains event, as well as transaction costs.
In most cases, an investment wrap platform is a custodial service, so investors that own units in a fund through wrap account A are able to “in specie” transfer to wrap account B (that is, another custodial service). Provided that the new and old wrap account are in the same name, and the fund(s) being transferred is available on both wrap platforms, this could be done without triggering a change of ownership or capital gains tax.
It is important to note that in the case of superannuation wrap accounts the assets are owned by the Trustee of the super fund and as such cannot be transferred “in specie”. Changing from one superannuation wrap account to another results in a change of the Trustee and hence a sale of the underlying investments with the corresponding capital gains tax applicable to super funds.
Wrap accounts revolve around a central cash account, which pays interest and serves as a transitional account, funding buy transactions for shares and managed funds, and receiving the proceeds when shares and managed funds are sold. Depending on the wrap platform, cash accounts can be online bank accounts, cash management trusts or a full featured bank account with a cheque book facility. Investors are usually required to maintain a minimum cash account balance to pay their administration fees (typically $1,000-$5,000), and buy transactions can only be executed if the cash is available in the cash account. |
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| Wealthtrac | Access wholesale managed funds without needing to meet the high minimum investment amounts through the Wealthtrac Portfolio Service.
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| eWRAP | Invest in a wrap account without needing a finanical adviser through Personal Choice eWRAP, a badged version of Asgard eWRAP.
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