Explaining Separately Managed Accounts

Part of a diverse investment menu

Federation provides investors and advisers with a range of separately managed accounts (SMAs) or model portfolios as part of a diverse investment menu, which may include managed funds, ASX listed securities, international listed securities, exchange traded funds, term deposits, fixed interest and cash.

SMAs are professionally managed portfolios of directly held investments such as listed companies, exchange traded funds or managed funds. Unlike a managed fund, where an investor holds units, in an SMA the investor (or the trustee on the investor’s behalf) holds a beneficial interest in the underlying investments. Investors gain a greater sense of transparency and ownership as they are able to view the individual investments in their portfolio, and the benefit of a professional Investment Manager making portfolio decisions on their behalf.

The Federation Portal provides detailed portfolio reporting so investors and advisers can see the value of the investments held in a model portfolio as well as how they contribute to overall performance.

Federation, and its ability to facilitate an automated portfolio of a wide range of assets, can be a complementary investment structure for advisers, accountants and investors (particularly those who have or are considering an SMSF) who appreciate the transparency and ownership of direct equities, but are less interested in the day to day management of the portfolio.

Benefits for investors

  • Beneficial ownership of underlying investments

  • Access to professional investment management

  • Tax efficiency

  • Avoid inherited capital gains tax (CGT) of pooled investments

  • Cost efficiencies through netting of trade

Benefits for advisers

  • Less time spent on paperwork

  • Transparency of all assets within the SMA

  • Tailor client portfolios to exclude specific securities or lock the portfolio from trading

  • Access professional investment management or extend value proposition to manage portfolio models

  • Removes requirement to provide a record of advice for changes in underlying investments

Anita PerrottetExplaining Separately Managed Accounts