What are SMA's
SMA's (Separately Managed Accounts) are the latest step in a long evolutionary process that began with the first unit trusts over twenty years ago. The goal is to provide individual investors with access to the benefits of portfolio diversification, professional management and administrative ease that are often only available to larger entities (or the very wealthiest individuals).
The defining feature of a Separately Managed Account is that the underlying investment assets are held personally by the investor (either legally or beneficially). In contrast, the underlying assets in a managed fund are owned by the fund while the investor owns units in the fund. Personal ownership has a number of advantages such as the prevention of inherited capital gains but often comes at the penalty of higher administrative costs. The ability to use technology to cost effectively manage administration has been the key driver to bring these more sophisticated solutions to investors.
