Separately Managed Accounts (SMAs)

What is a Separately Managed Account?

A separately managed account (SMA) is an investment account managed by professional fund managers. SMAs offer a range of model portfolios, professionally managed to align with an investment mandate, usually investment risk profiles. As the name suggests, this account is held ‘separately’ meaning that your money is not pooled with other investors. You receive all the benefits of holding the shares, or investment assets, as your own, whilst giving the professionals authority to act on your behalf in managing the portfolio.

How does it work?

What are the benefits?

• SMAs offer a range of model portfolios, professionally managed to align with an investment mandate, usually investment risk profiles.
• Active management means the SMA manager is evaluating and trading your portfolio regularly to maximise investment opportunities and returns where possible.
• Investments and securities are held directly by you providing transparency and efficiency for income and tax purposes.
• SMAs provide timely reporting as well as access to investment research and market insights through an online portal.
• When investing in shares, Australian dividend income is tax-effective where franking credits are provided. You also have the option to reinvest your dividend income back into your shares, reducing transactions costs as well as investing for further capital growth.
• Corporate actions are managed within the portfolio on your behalf.
• Your portfolio is automatically rebalanced in line with the investment risk profile of the selected portfolio.

What should I be thinking about?

• Investing directly into shares increases your exposure to market volatility.
• Capital growth and dividend payments are not guaranteed.
• The returns on the portfolio are not guaranteed and you may experience negative returns from time to time.
• It is best to have a long-term outlook for the ownership of direct shares; this may help to smooth out the impact of market volatility on your share portfolio performance.
• SMAs charge administration fees for the operation of your account.
• Diversification across companies and markets is harder to achieve when building a portfolio largely of direct shares. Managed funds provide more diversification at a lower level of investment.
• Capital gains tax may be payable on the sale of shares. Please seek professional tax advice before selling any shares.

This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.

Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733), Blue Rock Private Wealth (Melb) Pty Ltd (ABN 48 652 202 698, ASIC AFS No. 1298365) and their representatives make no representation as to its accuracy or completeness.

Published: September 2022.

© Copyright 2022.