Growing numbers of investors are taking the plunge and following financial advisers’ recommendations to try direct investments through separately managed account (SMA) services, van Eyk Research believes.
Mark Thomas, van Eyk chief executive and chief investment officer, said that research showed investors and advisers were increasingly attracted to the direct share ownership, control and transparency provided by the SMA structure.
“As investors become more sophisticated, they want greater flexibility and control of their assets,” he said.
“With an SMA, investment decisions are outsourced to professional managers, however, the investor retains beneficial ownership of the underlying investments.
“Unlike managed funds, there are no embedded unrealised capital gains but rather all dividends, franking credits and any capital gains or losses flow through to the end investor.”
Thomas said Australian Taxation Office data showed that over 60 per cent of self-managed super funds’ assets were held in direct shares and cash on December 31, 2013, which highlighted the need for SMAs.
“SMAs may overcome some of the limitations of managed accounts however, they are not for everybody,” he said.
“Investors need to seek professional advice to ensure that an SMA is the right solution for them.”
Thomas said van Eyk had plans to expand its SMA research capabilities in the next 12 months, starting with the launch of its iRate online research and portfolio construction tool.
