SMAs - Separately Managed Accounts

SMAs or Separately Managed Accounts are share portfolios managed by an investment manager on behalf of an investor who retains individual ownership of each stock in the portfolio in their own name.

THe idea is that the investor chooses a share portfolio from a range of existing "model" portfolios that are managed on the investors behalf.

The assets are held in the name of the client who then has the ability to adapt the portfolio if they desire.

Generally the level of investment is between $20,000 to $100,000 but some can go down to $5,000. Starting investors in the share market may find this approach attractive as they get the benefit of a professional to set the starting portfolio which they can gradually take over if they wish.

An SMA is seen to be more tax effective than a unit trust and more business-efficient for an an advisor than a wrap.

Three aspects that investors like about this type of account include ...

• they involve direct ownership of shares
• they are highly tax efficient because the portfolio is managed with each client's individual tax circumstances in mind, and
• they are cheaper than master trusts and wrap accounts.

Cash and property can also be included in the mix of investments and investors can choose whether to exclude a particular stock, sector or portfolio type.

The investor or their tax agent can access real-time reporting, easing the tax preparation process.

It is expected that SMAs will make managed funds obsolete for new investments and replace wrap accounts as they are more tax efficient and get the same investment outcome cheaper, and with greater control if desired.

Return from SMAs to Managed Share Funds