Praemium gets UK green light for SMA
By Darin Tyson-Chan
Tuesday 1 April 2008
Online portfolio administration specialist Praemium has received regulator approval to provide its separately managed account (SMA) product to the UK wealth management market.
The Praemium offering called Smartfund is comprised of a hybrid structure combining an SMA with a retail investment scheme.
"It's a combination of our SMA in Australia but we've had to overlay a trust structure on top of it," Praemium group managing director Arthur Naoumidis said.
"The reason for that is in England managed funds or unit trusts are tax free, so we've had to make it look like a managed fund from a tax perspective while maintaining its character as an equity portfolio from an investor's perspective," he added.
Naoumidis believes the unique structure of the product will now allow Praemium to service two sections of the market in the UK, the discretionary managed account market as well as the managed funds market supported by financial planners.
Smart Operator, a wholly owned subsidiary of the Praemiun group, will manage the fund while HSBC will provide the trustee and custodial services.
"In the UK the fund manager can't be the trustee and can't be the custodian whereas in Australia they can. So HSBC is providing the trustee and custodial services in this case," Naoumidis explained.
Regulatory approval took longer than expected because Praemium is the first in the market to construct a product like Smartfund which meant it had to seek a legislative change before it could become operational.
The product will not be launched to the retail market until the implementation and testing of the operational interface has been completed but Naoumidis said this would not take long and was a mere formality.
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