Arthur Naoumidis
Portfolio administration provider Praemium has called for tax reforms for investors transferring money from managed funds to separately managed accounts (SMAs).
Praemium managing director Arthur Naoumidis described the capital gains tax incurred by investors transferring money from managed fund products to their equivalent SMA models as “illogical”, particularly in these volatile financial times.
“Although the wealth management industry may not yet see traditional managed funds as a legacy product, I believe it is illogical for investors to continue to plough funds into managed funds when the more modern and technologically-advanced SMA product is available.
“It is even more illogical during a volatile market, when investors could benefit from switching to a product which is cheaper and enhances post-tax performance.”
Naoumidis said Praemium would lobby Federal Treasury to allow investors in managed funds to switch to an SMA model without being taxed as a consequence.
“If an investor wants to move from an opaque, expensive and tax-inefficient managed fund to an equivalent transparent, cost and tax-effective SMA, they should be able to do so without being concerned about the resulting capital gains tax issues.”
As part of its ‘product rationalisation review’, the Federal Treasury is considering providing rollover relief to facilitate the transfer of funds from legacy managed fund products to more efficient modern equivalents.
