Managed Accounts
While managed accounts have been around since the mid-nineties, they have really only caught on in recent years in Australia as an alternative to managed funds.
Managed accounts offer many advantages over managed funds as outlined in the table below, but not all managed accounts are the same, although some would have you believe otherwise!
Managed accounts are often referred to as individually managed accounts (IMA), separately managed accounts (SMA) or managed discretionary accounts (MDA).
| Feature | IMA |
SMA |
MDA |
Managed Funds |
| Professional fund management |  |
|
|
|
| Portfolio constructed from the time you invest | |
X |
X |
X |
| Customised portfolio construction | |
X |
X | X |
| Client retains beneficial ownership | |
|
|
X |
| Minimises portfolio rebalancing | |
X |
X |
X |
| Internally geared mandates | |
X |
X |
X |
| Fees tailored to investments | |
X |
X |
X |
| Access via a Product Disclosure Statement | |
|
X |
|
| Low minimum investment | |
|
X |
|
| Corporate actions administered | |
|
|
|
| Tax reporting | |
|
|
|
| Transparency | |
|
|
X |
| Ability to view underlying shares | |
|
|
X |
| In specie transfers | |
|
|
X |
| Avoid embedded capital gains tax | |
|
|
X |
| Netting of transactions | |
|
X |
X |
| Exclude stocks from portfolio | |
|
|
X |
| Tax efficiencies | |
|
|
X |
Not All Managed Accounts are the Same!
When investing in a Separately Managed Account or a Managed Discretionary Account, most managed account providers distribute your money into a predefined selection of stocks (and/or managed funds), known as a modelled portfolio, at the time you invest, just like a managed fund.
So while you receive all the benefits of share ownership, the performance of your portfolio may suffer, or worse, your capital may erode if the stocks have already realised their growth potential and are now under performing. And if the managed account provider employs investment strategies such as dollar cost averaging, which is common in the industry, it can result in the erosion of your capital, particularly in a bear market.
When you invest in the Direct Equity Individually Managed Account Service with Wealth Within, however, each portfolio is individually customised based on the investment strategy you select to take advantage of opportunities at the time you invest. We also continue to actively manage the risk to your investments to minimise the erosion of any profits or capital during sideways and downward movements in the share market.
In selecting investments to buy and sell, we focus on securities within the S&P/ASX 300 (depending on the investment strategy you select) which our research and investment team believe can deliver strong returns over the medium to long term.
This strategy is based on our philosophy which combines ‘timing the market’ with ‘time in the market’ to seek to maximise the return on your investments.
The benefit to you is that you will not be buying into an existing and what may be a less relevant and less timely portfolio. And in actively managing your investment we work towards eliminating the shares that continue to under perform and consequently impact on the potential performance of your overall portfolio return.
If you understand this, then the only real question to ask yourself is…
Would I prefer my investments to be timed into and out of the market,
eliminating the non performing periods when the market trends down or sideways
or would I prefer to be fully invested no matter what the market condition?
Given the recent market conditions, it's obvious which one will deliver long term consistent returns.
Usually only reserved for sophisticated investors with $500,000 or more to invest, the Direct Equity Individually Managed Account Service offered through Wealth Within now enables retail investors to tap into the benefits of individually managed accounts.
And with an investment from as little as $25,000, you now have a real alternative to investing in modelled portfolios.
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If you want to experience what it's like to partner with an investment company who treats you as an individual whilst making your money work hard for you, then we look forward to the opportunity of discussing how we can support you to achieve your financial goals in the share market.
To speak with a professional Client Services Consultant, call 1300 742 738 or Melbourne direct on 9290 9999.
Alternatively, click here for more information on the Direct Equity Individually Managed Account Service.
Want to take a more active role to managing your investments- learn more about our Share Trading Education.