Separately Managed Accounts (SMA)

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


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.


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.

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