SMA are a way of investing directly in securities (equities, futures and derivatives including currencies) while maintain the benefits of a professional investment manager. Like a Managed Fund, and SMA has a portfolio of securities (or other assets) that is managed by a professional investment manager. The key difference is that an SMA is not a pooled investment Trust that an investor acquires units in. Instead the client has an absolute entitlement to, and beneficial ownership of a portfolio of assets that are held on trust on their behalf. The assets held in a client’s portfolio are determined by the model portfolio(s) that they choose.
Structure of the SMA
A model portfolio is a portfolio of securities (equites and other assets) selected by ACH and its professional advisors (specialists in each asset class) in order to establish a balanced portfolio that will target a pre-determined yield for its clients.
You have full beneficial entitlement
The model portfolios are managed by professional investment managers. They make decisions on securities to invest in as well as corporate actions as they may arise
The SMA Fund is open to wholesale clients, providing institutional grade opportunities as well as institutional fees
All dividend and distributable income earned on the securities are paid directly to you along with any franking credits or capital gains. Any realized gains or losses flow directly to you.
Reduced administrative burden. Your portfolio is managed on your behalf, including tax reporting / record keeping, receipt of income, reporting and any corporate actions (voting etc..) This means you receive the benefits of investing directly without the administrative burden
No inherited capital gains, When you purchase or transfer securities into and out of your portfolio your own cost base is established for tax purposes. This means you only pay tax on realized gains accumulated from the day you invested. There are no tax consequences for you as a result of other client transactions.
Transparency. The SMA allows you to view the securities that you hold in your portfolio, as well as all the transactions and net position at any time.
Transfer. In most cases you will be able to transfer your existing equities into the portfolio when you make an investment. This is known as an in-specie transfer. Which means you don’t need to sell your holding prior to investing. This saves transaction times as well as time spent out of the market.
The SMA model portfolio will be detailed in the full IM and will provide an indication of target returns and asset mix
There are various risks typically associated with any investment including: