SMAs get a wrap
Financial advisers who are unable to offer clients direct share trading due to licence restrictions will now have access to a wholesale separately managed account (SMA), which will be available via wraps.
The first SMA for wraps has been launched by Direct Portfolio Services (DPS), and the company is currently in discussions with a number of platforms about offering the product.
Previously, SMAs have only been offered in the retail space as direct investments and could not be incorporated into platforms.
The SMA launched by DPS, ShareInvest II, is a wholesale offering and provides investors with a number of model portfolios to choose from.
DPS executive director Paul Bray said it provided a way for investors to hold their own individual managed share accounts through a platform.
“The client tells us what shares to buy from the model portfolios and we will administer them,” he said.
“Traditional SMAs have been a retail product with retail fees, but ShareInvest II is a wholesale product with management fees of less than 1 per cent,” Bray said.
The portfolio managers on the SMA are SMA Funds Management, Ausbil Dexia, Aegis Equities Research and Renaissance Asset Management.
DPS parent Explorer Group has taken significant shareholdings in the boutique fund managers being used by ShareInvest II, Bray said.
The portfolios will cover traditional investment strategies such as growth and value, as well as high-yield, aggressive and emerging companies portfolios.
There is also a listed property trust (LPT) model portfolio managed by Renaissance.
“The portfolios are treated like unit trusts, but the clients own the shares direct,” Bray said.
“As a result, we have been able to deliver a SMA with the technology to enable it to go on a wrap.”
The minimum investment in a portfolio is $25,000, which Bray said is necessary to get a reasonable spread of equities.
The wholesale product will be managed overall by DPS, which is also the responsible entity.
Bray said the new SMA would enable advisers, who do not have the ability to buy shares due to their Financial Services Reform (FSR) licence restrictions, to offer direct share investments through the platform.
“Some advisers cannot offer direct shares as they are not on their approved list, but when ShareInvest II is included in their platform, this will no longer be the case,” he said.
ShareInvest II follows on from a retail version that is sold mainly by RetireInvest advisers. It currently has $220 million of funds under administration in 1,300 accounts.
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