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Investor Education > Wrap Accounts > How do wrap accounts work?


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.

Using a central cash account
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.

Transaction in a wrap account
Investors are able to invest in a broad range of managed investments and shares to diversify your investment portfolio. 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.

Importance of advice
Financial advice is important as investing can be complex. You may need advice to assist you in creating your investment strategy and to undertake periodic reviews of your portfolio. What is also important is how you access and pay for advice. Pay only an hourly professional fee for advice however using an adviser should not be a requirement of being able to place and monitor your investments. Discover wrap accounts you can access that give you the control of executing your own investment decisions.


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