What is a Separately Managed Account (SMA)?

Relevant to vMAPs

SMAs are investment solutions that provide investors a professionally managed portfolio of predominantly, or entirely, listed securities. Available for superannuation, and non-superannuation monies, investors don’t have to undertake the investment research to build and maintain the portfolio, nor deal with the extensive administrative burden associated with direct share investing. Investors do, however, take advantage of lower trading costs than would otherwise be the case. Once invested, investors have more transparency than if they were to invest in a managed fund, they are able to see the shares and other securities that they have ‘beneficial ownership’ of. This means the investor has their own tax position and receives the dividends and any franking credits from the underlying securities.

Why invest in a SMA?

Relevant to vMAPs

For some investors, managing a portfolio of direct equities creates anxiety and a great deal of paperwork. SMA provide the right amount of control without the time consuming hands-on management associated with direct investing.

The advantages of investing in SMA's include:

  • The portfolio is looked after by professional investment managers who monitor and research investment markets;
  • Investors hold ‘beneficial ownership’ of the securities in your portfolio, and therefore receive the dividends and franking credits;
  • Investors do not inherit any tax liabilities owed by other investors, like in managed funds;
  • Investors have access to lower trading costs, as trades are netted across all investor holdings and then a single trade placed; and
  • Investing directly in the share market can take a lot of work and create a lot of paperwork. With an SMA portfolio, all you have to do is select the models you want exposure to and vMAPs will manage the rest and provide accountant-ready reports for tax-returns.

What are managed funds?

Relevant to Ventura and All Star Funds

Managed funds provide a popular way to access local and global investment opportunities, using the expertise of a professional fund manager. Managed funds pool the money of many investors. This money is then invested by a professional fund manager who uses the fund's buying power to purchase a wide range of investments. When you invest in a managed fund, you are allocated a number of 'units', rather than shares. Each unit represents an equal portion of the market value of the portfolio of investments. Each unit has a dollar value, known as the 'unit price'.  During the year, the fund will earn income in the form of dividends (share or property funds) or interest (bonds or cash funds). It may also make profits on investments sold. The fund must pay all this income and realised capital gains to unit holders as 'distributions'.

Why invest in a managed fund?

Relevant to Ventura and All Star Funds

For some investors, managed funds provide the right amount of control without the time consuming hands-on management associated with direct investing.

The advantages of investing in managed funds include:

  • Access to sophisticated investments that may not ordinarily be available or affordable to you as a single investor. With a professional fund manager managing your money means you can spend less time monitoring your investments, and you also gain peace of mind knowing that your money is in experienced hands;
  • Diversification. Managed funds have the buying power to access different asset classes, companies, industries, sectors and countries. With your savings spread across different asset classes, you can spread your investment risk and smooth out your long-term portfolio returns;
  • Expertise on your side. Qualified investment professionals have access to information, research and investment processes not readily available to individuals; and
  • Distribution reinvestment. Managed funds make it easy to reinvest your investment earnings so you can take advantage of compounding investment returns. It's easy because you can purchase additional units in the fund without having to spend extra cash.

What is multi-manager investing?

Relevant to Ventura Funds

A multi-manager investment is a strategy that invests in numerous funds controlled by other specialist fund managers. This combines the styles and expertise of several investment managers. It is designed to minimise risk and exposure to any one fund manager, particularly in fluctuating market conditions. With some multi-manager funds, you are able to select the mix of your investments; in others, the mix of assets is chosen for you. The key is that multiple investment managers are investing within those asset classes on your behalf, drawing on their own specialised processes and expertise.

Why use multi-manager investing?

Relevant to Ventura Funds

Multi manager investments provide all the benefits of managed funds, as well as the advantages of:

  • Extra layer of risk management - the multi-manager can be likened to a conductor in an orchestra. All the musicians in the orchestra are specialist experts in their own right, but the conductor brings them together for the benefit of the overall portfolio;
  • Monitoring managers - the multi-manager keeps close tabs on each manager, conducting regular face-to-face reviews and ensuring that they stay true to their investment strategy;
  • Hiring and firing managers - not only will a multi-manager hire and fire managers on your behalf, all the transaction costs of moving securities are reduced;
  • Scrutiny of managers - Multi-managers have their own specialised monitoring systems to evaluate the people, processes, portfolio and performance of each underlying manager on an ongoing basis;
  • Convenience - Multi-manager investments allow investors to keep tabs on an entire investment portfolio with just one investment; and
  • Affordability - With a large investor base, multi-managers are able to access volume discounts from underlying managers and pass on these discounts to investors. As a result, multi-managers tend to be price competitive with single managed funds.

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