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About Separately Managed Accounts (SMAs)

What is an SMA?

Put simply, an SMA can be thought of as a more efficient alternative to a managed fund. You are still investing in shares and you are still accessing the fund manager's ability to select stocks.

The key difference between an SMA and a managed fund is that the SMA is non-unitised. This means that SMAs have several advantages over managed funds including:

Beneficial Ownership

• The investor is the beneficial owner of the underlying shares.

Greater transparency

•  The investor and adviser are able to see exactly what shares their own, thus enriching their investment experience.

Cost efficiency

• When you invest in a managed fund, you are buying the fund manager's ability to select stocks to create an investment model. However, you pay for a lot more than just their intellectual property. You also pay for unit administration, brokerage charges and many other costs. In an SMA, some of these costs are eliminated and many others are reduced. The result is that an SMA is a more efficient cheaper than the traditional managed fund.
• In relation to wrap platforms, the SMA removes a further layer of custody service and fee associated, effectively reducing the cost of investing.

Tax efficiency

• The investor, with the assistance of their adviser, can choose to hold on to specific tax parcels or select the most favourable tax parcels from within, or outside, the SMA for disposal in order to optimise their tax position.

Portability

• As beneficial ownership of the shares rests with the investor, inspecie transfers of share parcels is an inherent feature of the SMA.

Increased control

• Some SMA products, including those powered by Præmium's SMA technology, enables significant customisation of client portfolios. For example, the SMA offers the ability to load and lock stocks external to the model, freeze tax parcels to minimise future CGT liabilities, place minimums on rebalancing trades to reduce trading activity.

General reading

Document Title	Date	Type	Size
Using SMAs in Self Managed Super Funds Financial Standard Guide to Managed Accounts: Guide Series 2 If you would like to receive a hard copy of the guide in the post, click here and send us your postal address	March 2008		4 MB
Financial Standard Guide to Managed Accounts: Guide Series 1 If you would like to receive a hard copy of the guide in the post, click here and send us your postal address	April 2007		2 MB

The information contained on this page is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, individuals should seek independent financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring a financial product.