Ethical Investment | Ethical Investment Advisers

Seeking Riches? Chances are, you aren’t willing to Compromise Your Values

Published on: March 16, 2018Category: Ethical Investment

If you strongly believe that your investments should be managed responsibly and ethically, you aren’t alone. In fact, recent research into consumer attitudes by the Responsible Investment Association of Australasia showed that an overwhelming majority of Australian investors (92%) expect it. That research also revealed many other ways that values are likely to dominate investing trends for the next decade.
Below are some of the most important findings of that research, and some information on how these attitudes are likely to change investing.

Young Investors are driving a change in attitudes

Perhaps not surprisingly, young investors are the most committed to acting on their principles. Compared to Gen X and the Boomers ahead of them, they are significantly more likely to prefer responsible funds over funds that maximise returns. Nearly 9 in 10 millennial investors claimed that they would move their investments if they found that their current fund engaged in behaviour that violated their values.

Women (millennial women in particular) felt strongly that they should expect ethical behaviour from their funds. Women are a rapidly growing portion of Australia’s investors, and their strongly-held beliefs are no doubt contributing to the fact that ethical investing has gone beyond a preference and become an expectation.

Preferences for ethical investing have become expectations

Australian investors are no longer just shopping around for ethical investments; they are expecting ethical behavior as a standard. More than half of all Australians already expect that their advisers are considering societal and environmental values before making decisions about their accounts.
Moreover, it has become a priority for investors that their funds not merely avoid harmful practices, but actively seek out ways to accomplish good through investment. Investors cared most about renewable energy, but cared almost as much about societal issues such as the treatments of laborers.
Yet, ethical investors don’t believe they’re being given all the information

Australians care about making ethical investments, but many of them still feel that they aren’t getting as much information as they need to make these decisions. Nearly 60% of Australians claim that the independent information available is not sufficient. This may signal a coming demand for a legislative or 3r d -party solution.

Amid this uncertainty, certifications have become an important signal for marking ethical investments. A high percentage of Australians (86%) believe that certification by a third party is a good mark of safety for an investment. They are far more likely to prefer an investment that has been certified over one that has not.

Funds need to adapt fast

Value-based investors have become a significant amount, even a majority, of all investors. As this new generation looks for more options and more information, those who are able to create solutions that speak to those needs have the potential to carve out a powerful place. At least for the time being, investing on values may be the most profitable proposition.

Clean Technology—A Force for Disruption?

Published on: February 17, 2018Category: Ethical Investment

The 2017 RIAA annual conference covered quite a few exciting topics. One event that generated a lot of discussion was a presentation by Professor Tony Seba . Dr. Seba is a world-renowned Silicon Valley futurist, known for his focus on clean energy. His presentation covered some of the ways that clean energy may become not merely a great investment, but a major disruptive force with the power to reshape the market.

As Dr. Seba and other thinkers have begun to warn us, clean energy is going to significantly change the look of our cities and the sorts of services that are offered in them. Combined with trends like autonomous vehicles, the whole landscape of city economies will shift. As a result, whole industries and all the workers and vendors who rely on them may be pushed toward obsolescence. The industries most at risk are not necessarily the ones you’d expect.

Here are some of the industries that are facing disruption in the next decade…

Petroleum Engineering

Clean energy’s disruptive potential has already been noted in the press. Earlier this year, the Financial Times covered the story of an English business in crisis. The company in the article develops fuel saving devices for petrol engines. When trying to pitch their latest device, they suddenly discovered that there were no auto manufacturers left in the world who were willing to devote development funding to petrol devices.

Instead, electricity and batteries have become the focus of every manufacturer. This change was not announced, and seems to have taken place almost overnight. Overnight, the options of tens of thousands of career engineers and researchers have been put in question. Even more troubling than that is the possibility that these changes are happening faster than universities can adjust to them. There is a real risk of students graduating with skills are may not be required in just a couple years.

Naturally, the same goes for the training and development involved in the extraction of these resources.

Gas Stations

The average gas station relies heavily on the profits that are brought in from petrol. Even if these stations switch to electric, they can expect nowhere near as many customers (many cities are beginning to install unmanned stations and poles for charging). This is a troubling disruption. Gas stations typically provide important services for travelers and are often relied on heavily for

general goods in rural areas. Without petrol to keep them afloat, it’s an open question what can fill this role.

Toll Roads

Roads are expensive to maintain, even when they aren’t traveled often. This is because vehicles only account for a small amount of a road’s daily wear and tear. The sun—and the constant expansion and compression its heat causes throughout the day—makes regular maintenance necessary.

With far fewer cars on the road, there are many toll roads that may lose the ability to manage their maintenance budgets. That leaves open the question of who is going to pay for them. Local governments and taxpayers alike may balk at the idea of taking on the cost, and many of these roads could simply close.

The Good News?

Many industries may see surprising disruptions as a result of renewable energy. However, wherever there is the possibility for change, there is also opportunity. In this case, moving forward means taking long-overdue steps to protect our world for the next generation.

10 Steps to Becoming a more Conscientious Consumer

Published on: November 30, 2017Category: Ethical Investment

Now is an important time in human history to be aware of how your consumption affects the world. Many resources may be in crisis in the next few decades, so it’s important that habits begin to change now. One way you can help is by becoming a conscientious consumer—someone who is self-aware of their habits and makes changes in those habits that are better for the earth or other people.

Here are 10 steps you can follow to become a more conscientious consumer…
Choose to do with less: One of the first things you can do to consume more ethically is to consume fewer items. Cut out the items that you don’t need.

Learn about the names behind the products you buy: The manufacturers of your products are easy to find. Research their names with your preferred search engine to learn more about them. Stop buying brands that aren’t in line with your values.

Create a list of manufacturers/brands you trust: To make ethical consumption easy, make a list of the brands that you trust based on the research you’ve done.

Continue to hold your favourite companies responsible: Make an effort to be aware of the companies you choose to purchase from. If their behaviour changes and they are no longer consistent with your values, make sure that you stop buying from them.

Choose products that are produced sustainably: There are many companies that produce products in a sustainable way, or craft them from sustainable materials. Try to choose these companies whenever possible.

Choose products that can be recycled: Recycled products are always marked with the international recycling symbol. Watch for it to help you choose recycled products.

Choose locally-produced products: Choosing local products allows you to support your own community while ensuring that products don’t have to travel far. A lot of waste is produced shipping products around the globe, so a local preference can.

Network with friends to share used products: Instead of throwing out used products, create a network to share items that are no longer needed with your friends. Baby clothes, child’s toys and old furniture are great trading items. Donation to a charitable organisation is another option that avoids waste.

Choose durable products: Whenever possible, choose the products that are designed to last. Even if it means paying more once, not needing to replace an item for a longer amount of time means both lower costs and less waste in the long term.

Provide proper maintenance for your products: Another part of choosing durable products is giving them the maintenance they need to last for their full lifetime. Even if it’s inconvenient, the proper maintenance guidelines for anything from cars to appliances should be followed closely.

Start Becoming an Ethical Consumer Today

Changing habits can be hard, but the reward for responsibility is a better world for all of us. Make an effort to become a more conscientious consumer today.

5 of the Latest Trends in Ethical Investment

Published on: November 22, 2017Category: Ethical Investment

Ethical investments are no longer the domain of a select few socially-conscious investors. Interest in responsible investing has swelled to become a phenomenon that is sweeping across all types of funds and projects, creating new opportunities and growing to match the preferences of the astute investors. This is an exciting time for ethical investment. Here are five of the latest trends to watch:

Addressing Homelessness with Social Impact Investing

Housing development has always attracted a lot of attention from investors, but lately, far more emphasis is being placed on the community impact of developments. Ethical investors and the funds that cater to them are beginning to engage developers who care about the social impact of their developments. More specifically, investors are trying to avoid contributing to community problems that result from imbalanced development, such as gentrification and housing crises that force young residents out.

Developers, in response to this pressure, are starting to plan around creating a balance of housing in their projects, instead of housing developed exclusively for the most affluent. Affordable housing wings are becoming a more common part of even luxury development projects. This emphasis helps protects the diversity in even high-demand areas into the future.

A New Focus on Renewable Infrastructure over Research

Green technologies have always been an important part of ethical investment, but the focus of these funds is starting to change. Research and development has taken a backseat now that energy sources such as solar collection have become viable models pursued on an international scale. The modern ethical investor is now far more interested in visionary applications of this working technology—specifically a speedier development of massive renewable infrastructure capable of finally replacing the infrastructure of the last generation of energy.

Modern cities are going to be a greater challenge, so many renewable energy infrastructure developers are choosing to focus on the developing world. Ethical investors appreciate these projects both for their positive impact on developing communities and for the lessons the entire world will learn as these projects succeed and scale up.

Greater Accountability through Data

In most countries around the world, a fund does not have to meet any requirements to label itself as ‘ethical’. This presents a challenge for investors who care deeply about whether their

investment is being used the way they intended. Fortunately, the arrival of “Big Data” created the potential for countless new tools for evaluating ethical investments.

Complex corporate or fund structures once made it more difficult for investors to understand how their investments were being used. This was not only a concern for investors, but also for the managers of these funds who were accountable for assurances to their ethically-conscious clients. The rapid expansion of data collection and analysis methods within the past few years has made it far easier for firms—and their media and shareholder watchdogs—to evaluate the path and effect of any money that is invested. These new tools provide for a new level of transparency and accountability that may lead the way to far more transparent investing in the future.

Ethical Practices that Outpace Regulation

Major corporations and their local regulatory bodies are not always the closest friends. However, in response to many influences, including the growth of ethical investments, corporations around the world are outpacing their own regulators when it comes to adopting more sustainable and socially-conscious practices.

The most interesting part of this trends is the effect: These companies are being rewarded not only by investors who are flocking to more sustainable funds, but also by consumers who are increasingly showing a preference for brands that share their values. Even in countries like the US, where there is little state pressure for more sustainable practices, companies are choosing to assume that leadership for themselves.

More Profitable Ethical Investment

In part because of the trends that were covered earlier, ethical investments are on track to be a better opportunity than ever before. The challenges faced by the world, including diminishing supplies of water and oil, have galvanized investors all over the world to make impact awareness part of every investment. Instead of resisting, companies appear eager to partner with their investors to tackle these problems in a way that promises a better world for everyone.

With more funds ready to serve investors, more exciting projects to pursue and better data to evaluate all of it, ethical investment is going to be far more than just a strong trend through 2018—It stands to change the face of investing forever.

Who is Choosing Ethical Investments?

Published on: November 15, 2017Category: Ethical Investment

Ethical investment has been growing as a movement for several years now, but it’s only recently that it has become such an active and public one. Millennials, who have reached an age where they are beginning to invest, are perhaps the group most responsible for the new focus on sustainability and social impact. However, some credit must go to all the major role models who are showing them the way. Here are some of the influencers who are choosing to make their investments ethical .

Visionary Entrepreneurs

More than a few of the entrepreneurs disrupting old markets or forging new ones have shown an interest in making sure that their products as well as their own investments are ethical. Elon Musk is one entrepreneur who is notable for pursuing sustainable goals with both his companies and his investment choices. Elon has been a major pioneer in moving electric cars to the market with Tesla. However, he’s not only known for that. He’s also a major investor in solar panels, efficient public transportation methods of the future and many other sustainable projects.

Entrepreneurs, especially those with celebrity status, can play a powerful role in shifting public perception of sustainable businesses. Such endorsements can help sustainable projects get the funding that they need. That so many of entrepreneurs are now making ethical considerations in public ways should be considered a very promising sign for the future of ethical investment.

Major Investors

While it’s always encouraging to see entrepreneurs embracing sustainable businesses practices and investments, it’s also expected that young entrepreneurs will embrace the newest technologies. Some might argue it says a lot more about how important ethical considerations are becoming when they’re embraced by experts whose first priority has always been the performance of the investment.

Billionaire Warren Buffet is one of the most successful investors in the world, and has written several well-regarded books on the subject of investing. His early investment into the Chinese electric car company BYD was baffling to his critics, but he has since been vindicated by that company’s growth into the largest electric car manufacturer in the world. While Warren Buffet does not consider himself an ethical investor by definition, his risky investment showed the finance world that green can be a smart investment.

Big Multinationals

Google made an extraordinary promise last year: that all of their operations would be powered by completely renewable energy by the end of 2017. It was a bold goal that would require them to make many expensive decisions that had nothing to do with their product. However, they were not only looking to purchase renewable power, they were beginning a massive project to produce some of it for themselves.

Google isn’t the only company making renewable commitments for the year. Competing technology companies Apple and Microsoft have also made ambitious goals to power their operations with renewable energy. While these companies have not revealed how these changes will affect their costs, it seems reasonable to believe they expect these moves to return a profit in the long run.

Investing ethically can be for everyday Australians not just influencers and entrepreneurs. Be inspired and invest ethically.

The Latest Trends in Renewable Energy Technology

Published on: November 9, 2017Category: Ethical Investment

There’s always something exciting going on in renewable energy, and this year is no exception. There has been so much news about renewable energy production and storage within just the last few months, that it can be hard to keep track of all the latest developments. Here’s a list of a few of them that you’ll be hearing more about we move into the next year.

Mini-Grids

Mini-grids, or micro-grids, have become an important part of the conversation about the future of renewable energies and the deployment of their infrastructure. These small, independent grids are light enough enough that they can be powered by renewable energy technologies that already exist. They can be deployed to allow certain structures or small communities to be powered only by renewable fuel while in a grid powered by a traditional power plant—or in a place where there is no grid at all.

This allows for low-budget deployment of renewable infrastructure, and will likely play a major role in philanthropist missions to expand electric power in developing nations.

Lightweight Delivery

Many renewable energy companies are intensely interested in batteries, and other portable means of energy storage. The introduction of drones—which replace an entire vehicle while being powered with only a light battery—as delivery vehicles for food services and shopping services like Amazon is going to have a major impact on the market demand for batteries. This may have several positive consequences for renewable energy investors, including an infusion of interest and funding into the promising science of storage.

High-Performance Renewable Fuels

Renewable liquid fuels have received a cold reaction from the market compared to other preferred sources such as batteries. Perhaps part of the reason that renewable fuels have had trouble catching on is their (undeserved) reputation for low performance compared to gasoline. That reputation is likely to change soon, however, because renewable fuels have reached a level of refinement that allows for extremely high performance. The first renewable jet fuel has been successfully tested this year, and it may lead the way to renewable fuels being used for many more applications.

China Leading the Way?

If you want to know what’s next for renewable energies, look to China. While countries like Germany have made a name for themselves with ambitious national energy projects, no one seems as excited or as ready to go all in on renewable energy as China. China has overtaken the rest of the world in the development of solar power production, surpassing their ambitious goals and moving years ahead of the schedule they set for adopting solar power.

China is now home to many of the largest solar panel manufacturers in the world, and it’s citizens use more solar panels than any other nation in the world. China’s eagerness to adopt solar power and played a large role in pushing the price of solar panels down until more consumers all around the world could afford them.

What does it mean to invest ethically?

Published on: August 29, 2017Category: Ethical Investment

When you choose your investments based upon your personal principles instead of profitability alone, you are acting as an ethical investor. Ethical investors look at the practices of a company or fund before considering it as an investment. You should consider factors like a company’s impact on the environment, its relationship with its labor force or its interaction with the local community. If you care about how your investment will be used, and what kind of impact it will have on the wider world, then you are an ethical investor.

To understand ethical investment, it’s important to also understand how every investor can behave as an ethical investor. To invest ethically is to…

Support companies who share your values

Everyone has values. If you know the values that are more important to you, then it makes sense that you would also care about investing ethically. Ethical investors feel a sense of personal responsibility for how their investments make money. Most Australians would not deliberately choose to invest with companies that exploit children or pollute the environment. But often that is just what happens if you don’t ask where your money is invested. Ethical investors know that some companies have poor environmental and labor practices. They want to avoid these companies and put their money with businesses who are doing the right thing. By investing with companies who share your values you can successfully invest ethically.

Hold companies accountable

Even after your initial investment, ethical investors continue to hold companies accountable. You may choose to withdraw an investment from a company that has recently acted irresponsibly. Ethical investors know that irresponsible corporate behaviour does not bode well for share prices. You may instead choose to write a letter to the company. By writing letters to companies, either as an individual or with other investors, you can ask companies to improve their operations, and avoid certain business practices. By having open and clear communications with companies, ethical investors feel empowered as investors. This means that you will often be more informed of the plans and operations of your investments. Which means you can better make decisions on whether you remain invested, or divest.

Enjoy better returns!

That’s right. Ethical investment funds have outperformed mainstream funds—not just this year, but for the past 10 years! (Source: ABC NEWS, Ethical Investment funds outperforming mainstream counterparts: study, 25 July 2017). The latest research from the Responsible Investment Association Australasia again shows that Australian share funds have actually outperformed their mainstream peers over the last 10 years. Most of these better-performing investments are focused on ethical sectors such as clean energy and health care. Whilst avoiding weapons, tobacco, gambling, and fossil fuels. Ethical investors know that cleaner, greener investments are better for the planet and they also make better economic sense as long-term investments.

Start investing ethically, today

Investing ethically is taking off. In Australia today, $1 in every $2 invested has some form of ethical or responsible investment strategy. You can invest ethically too! If you aren’t sure where to invest ethically, a specialist ethical investment adviser will build and maintain an environmental and socially responsible portfolio based on your values and financial needs. We make it simple and rewarding to invest ethically.

Ethical investing means business

Published on: January 26, 2017Category: Ethical Investment

Karen 6/18/2018 Ethical investing means business
THE AUSTRALIAN
Ethical investing means business
JAMES KIRBY THE DEAL 12:00AM June 15, 2018

In the context of a royal commission that has hung financial advisers out to dry, it’s a brave operator who actually straps themselves to the mast and publicly identifies as an “ethical financial adviser”. But they’re out there, and they mean business.

In fact there have always been ethical advisers – in spirit if not in name – and they could typically be found advising nonprofits and religious charities.
As Mike Josephson, an adviser at Ethical Investment Services, says: “We’ve been working under this brand name for nearly 30 years. It’s not new … but the elevated interest in the sector is certainly new. Beyond doubt, we as a group are getting a lift from what’s been coming out of the royal commission.”
Josephson is actually a former AMP adviser. He moved to the now beleaguered insurer by way of San Francisco. before settling in Melbourne and changing direction.

Likewise, Karen McLeod, Josephson’s colleague in Brisbane, initially worked at Godfrey Pembroke, an NAB financial planning subsidiary (which is now for sale following the royal commission) before she struck out for the sunnier pastures of ethical investing.

Will Hamilton, a regular contributor to The Australian and number 34 on the list this year, runs independent planner Hamilton Wealth Management. He does not brand himself an ethical adviser, but in common with many of his peers he certainly wants it to be clear he is ethical.
“Our industry is being put under a spotlight and that’s a positive development,” Hamilton says. “It throws up important issues and engenders debate about what the true objectives of the profession should be.”

So what then is an ethical adviser?
Needless to say, the vast majority of financial advisers would claim to be ethical and – in common with any other profession going through a scandalous period – it is clear most advisers have been left to work against the bad reputation that has been forged by a minority.
https://www.theaustralian.com.au/business/the-deal-magazine/ethical-investing/news-story/a501849543c75bfce880e2bbb1e56665 1/8

6/18/2018 Ethical investing means business
Within the profession there has also been a small group working on actively building an ethical framework. In fact they have their own representative body, the appropriately titled Ethical Advisers’ Cooperative.

The vast majority of financial advisers would claim to be ethical and most have been left to work against the bad reputation forged by a minority. However, the umbrella group for the entire sector is the Responsible Investing Association Australasia, which is the peak body for both Australia and New Zealand.
At the website responsibleinvestment.org, the association has built two very useful resources: a list of all the fund managers in the ethical sector, and a list of all financial advisers in Australia who have undertaken a course or receive specific accreditation from the RIAA. The second list has fewer than 100 advisers, a drop in the ocean when you consider there are more than 20,000 across the local market.

Separately, the fund manager Australian Ethical Ltd keeps a list of advisers organised state by state. This list is similar but not identical to the RIAA.
Customers who actively seek out ethical advisers come from all walks of life, though McLeod readily volunteers that her company has a heavy representation among workers in nonprofits such as charities and environmental protection groups. “We also get our fair share of academics,” she says.

More broadly, the customer base of many ethical planners is often not wideeyed earlystage investors, but rather experienced ones who have come to the conclusion that mainstream planners are not representing their values. And those values can be complex – one investor might be procoal but antigambling; another may have no issue with gambling and be passionately anticoal. The definition of ethical investing is thus variable, and there will always be grey areas.
For example, there is a perennial debate around nuclear power and uranium. Some environmentalists see nuclear power as the least worst alternative for industrial energy. At the other end of the spectrum there are those who will oppose electric cars, arguing that they still hook into industrial power and that those power plants will most likely still be sourcing from fossil fuels such as gas or even coal. https://www.theaustralian.com.au/business/the-deal-magazine/ethical-investing/news-story/a501849543c75bfce880e2bbb1e56665 2/8

Fossil Fuel Free Portfolio For Ethical Investors

Published on: October 24, 2016Category: Ethical Investment

Brisbane based financial planning group Ethical Investment Advisers has rolled out a new Separately Managed Account (SMA) that is perfect for ethical investors looking to divest from fossil fuels and invest in sustainable investments.

The Ethical Investment Advisers Mid-Cap SMA has huge potential to raise the benchmark of financial investment in the country through positive screening and analysis that will help investors make a competitive return without compromising their ethical values.

In particular, the SMA will avoid fossil fuel investments (oil, gas, coal, and coal seam gas), tobacco, uranium mining, and weapons, and will focus on companies which are providing positive solutions to global issues like aged care, sustainable property, healthcare, renewable energy, medical technologies, education, and information technology.

According to Ethical Investment Advisers’ Director Louise Edkins, “The model portfolio is an exciting product that offers social and environmental values with financial benefits. The mix provides a combination of smaller and medium sized Australian listed companies providing competitive financial returns without compromising their client values.”

The objective of the Ethical Investment Advisers Mid-Cap Separately Managed Account is to outperform the S&P/ASX Mid-Cap 50 over the long term, while providing investors with access to small and mid- cap stocks which meet environmental and socially responsible standards.

INVESTORS PREPARED TO SWITCH IF CONCERNS IGNORED

Advisers should be aware that quarter of superannuation members are prepared to switch super funds if they find their current one was invested in coal seam gas, based on concerns about environmental impact (Market Forces survey compiled by The Australia Institute, 2013).

The Australia Institute also found that a greater proportion of respondents believed that in order for a superannuation company to make investments that were ‘in their long term interests’, funds should consider ethical and environmental implications (40 per cent) rather than simply maximising financial returns (36 per cent).

Fortunately, advisers can now offer the SMA as a product solution for clients that are concerned with environmental and ethical issues. The SMA is ideal for investors who want to access to small and mid-cap stocks which meet their ethical requirements and a mix of long term opportunities and income.

For more information regarding the Ethical Investment Advisers Mid-Cap Model Portfolio, contact us today, or read more about the Model Portfolio.

ABOUT ETHICAL INVESTMENT ADVISERS

Ethical Investment Advisers provides investment solutions which meet clients’ values, whilst still receiving a solid return. By integrating the social, environmental and financial aspects of an investment, they believe that a more sustainable investment return is possible.

Ethical Investment Advisers has an Australian Financial Services Licence (276544). The SMA Managers have experience in portfolio creation and management, and vast experience in stock selection, having managed ethical investment portfolios for over 10 years. The managers provide advice on over 75 Self-Managed Super Funds and hundreds of other superannuation and investment portfolios, with a large portion of funds invested in a managed portfolio of Australian shares. They are actively involved with the Responsible Investment Association Australasia (RIAA).

MEDIA CONTACT:

Karen McLeod, Ethical Investment Advisers
Phone: 07) 3333 2187
Website: www.ethicalinvestment.com.au
Email: kmcleod@ethicalinvestment.com.au
Post: PO Box 824 BULIMBA QLD 4171

The contents of this press release are intended as general advice only. No specific person’s circumstances, financial situation or objectives have been taken into consideration. You should not act on the information provided without seeking personal advice from an appropriately qualified financial planner. While the sources of information have been verified as reliable, the actual content has not been checked for accuracy. Consequently Ethical Investment Advisers does not warrant the accuracy of the information nor accept liability for any errors. Past performance is no indication of future performance.

Separately Managed Accounts (SMA)

Published on: October 23, 2016Category: Ethical Investment

Although similar to a managed fund, in that your investments are being managed by investment professionals, Separately Managed Accounts (SMA) are far more flexible and transparent.

Instead of buying units in a managed fund or trust, when you purchase an SMA you are actually purchasing each individual investment. This gives you more transparency over the assets you own, as well as more control over capital gains tax and switching investments. You are the beneficial owner of the underlying securities and that means you receive the dividends and franking credits from the underlying shares.

How is an SMA different to a managed fund?

An SMA is different to a managed fund, in that it allows you to:

• view the underlying Australian shares of a portfolio;

• save up to 20% in management costs than a comparable managed fund;

• minimise brokerage costs compared with a normal share portfolio;

• avoid ‘inheriting’ capital gains when investment managers sell assets before you invest to fund other investor redemptions; and

• minimise tax when you transfer shares between SMA models

Transparency

Unlike managed funds, which generally do not allow you to see what underlying investments you own, when you invest in SMAs via a platform you will have a ‘single view’ of your Australian share holdings via your statement or your online account.

Customisation

All Australian shares will be selected and managed within the model portfolio by the investment managers. If for some reason you wanted to sell one of the shares in the model portfolio and replace it with another Australian share, you can easily make a change, while still having the portfolio managed by a professional team. This is an excellent tool which is unavailable in an ordinary managed fund.

Avoid ‘inheriting’ capital gains when investment managers sell assets

Typically when assets within the managed fund are sold by the investment manager the capital gain is distributed to all investors in that fund at the end of the tax year and tax is payable on their share of the profits.

A key benefit of an SMA investment is that investors are not invested in ‘common’ units, but rather the underlying shares are recognised as held for your account. This means if assets are sold you will pay tax on your share of the profits from the date you joined the model, not from the date the model started, nor for realisations for other investors. This means you will not ‘inherit’ capital gains from previous events, or other investors’ actions.