Advantages of Managed Accounts over Managed Funds
A Managed Account offers a number of benefits that are not available to Managed Fund investors. These include:
1) Transparency - you can see what you own and are able to view all of your underlying holdings.
2) Flexibility - in-specie transfers allow for transportability without realising capital gains.
3) Tax efficiency - unlike a managed fund, you don't buy into embedded unrealised capital gains
4) Your tax planning is improved. Online reporting is readily available throughout the year offering you interim tax positions that are updated monthly making them ideal for tax planning.
5) You receive a personalised tax statement. Your FPWS Managed Account tax statement reflects the tax position of your individual investments, not the position of a fund, because you own the underlying investments.
6) Tax optimisation - With a Portfolio Mandate your net losses are available to you to reduce your tax liability from other net capital gains you may have earned.
The FPWS SMA offers the following:
- Flexible commission structures
- Ability to customise at the client level
- Web reporting with interim tax reports which allows for informed tax planning throughout the year
- Personal Investment Portfolios for existing holdings
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Online broking |
Managed Fund |
Managed Account |
Nature of relationship |
Non-discretionary |
Discretionary |
Discretionary |
Ownership structure |
Direct (beneficial or legal) ownership of the underlying investments |
Indirect ownership via a trust which pools and holds the underlying investments |
Direct (beneficial) ownership of the underlying investments |
Unitisation |
Not unitised |
Unitised |
Not unitised |
Customisable |
DIY personalised |
Investment management on a single portfolio basis |
Investment management on either a model portfolio basis or personalised portfolio basis with customisation |
Key tax attributes of SMAs
- Absolute entitlement/beneficial interest
- In-specie transfers in and out of SMAs
- No embedded capital gains
- Pooling and netting can potentially lower trading costs
- Opportunity for effective after-tax management
- Tax reporting functionality
- Tax consequences easily managed
Capital Gains Tax (CGT) consequences are easily managed.
This includes distributions of realised CGT, tax free and tax deferred when calculating CGT positions. As data is available from the close of business the day before, with the exception of LPTs, you can see your clients' tax positions instantly.
Easy to move clients into the Service and add to their current holding
Setting up a client in the Service is as easy as completing forms and having the client transfer the money into a holding account. Should clients already hold existing stocks, these stocks can be "in specie transferred" into the Service and filtered into the chosen investment models. Clients can add to their investment via a direct debit to the Service.