Australian equity markets were buoyant throughout the March quarter.
The S&P/ASX 200 index rose 3.5%, with banking stocks the best performers. Resource companies also performed well, boosted by financial results that benefited from a dramatic increase in commodity prices (especially for iron ore and coal) in the latter half of calendar year 2016.
Capital management was a common theme, with several companies (such as AMP, QBE and Coca-Cola Amatil) announcing buybacks. Company outlook statements were mostly positive, though cautious.
There are plenty of reasons for investors to be cautious too, with the ASX pricing in benign conditions despite geopolitical tensions rising in North Korea and Syria. The portfolio does not have any exposure to international equities, but Australian stocks will no doubt suffer if conditions deteriorate.
The main positive contributor was the iShares Core S&P/ASX 200 ETF, which returned 5.0%, reflecting the strength of the Australian market during the quarter.
The Macquarie Income Opportunities Fund and the iShares Core Composite Bond ETF also managed returns, of 1.4% and 1.2% respectively.
|PERFORMANCE TO 31 MARCH 2017||1 MONTH||3 MONTH||6 MONTH||1 YEAR||SI* (P.A.)|
|InvestSMART Income Portfolio
|Morningstar Multisector Moderate Index
|Excess to Benchmark
|RBA Cash Rate 1%
|Excess to Objective
Source: Praemium, RBA. Returns are after investment fees and admin fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 29 December 2014.
While every care has been taken in preparation of this document, InvestSMART Financial Services Pty Limited (ABN 70 089 038 531, AFSL 226435) (“InvestSMART”) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for providing general information, without taking into account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. This document has been prepared by InvestSMART. The information contained in this document is not intended to be a definitive statement on the subject matter nor an endorsement that this model portfolio is appropriate for you and should not be relied upon in deciding to invest in this product. The information in this report is general information only and does not consider your individual objectives, financial situation, needs or circumstances. No representations or warranties express or implied, are made as to the accuracy or completeness of the information, opinions and conclusions contained in this report. In preparing this report, InvestSMART has relied upon and assumed, without independent verification, the accuracy and completeness of all information available to us. To the maximum extent permitted by law, neither InvestSMART, or their directors, employees or agents accept any liability for any loss arising in relation to this report. The suitability of the investment product to your needs depends on your individual circumstances and objectives and should be discussed with your Adviser. Potential investors must read the PDS, Investment Menu and FSG along with any accompanying materials. Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income, but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Past performance of financial products is not a reliable indicator of future performance. InvestSMART does not assure nor guarantee the performance of any financial products offered. Information, opinions, historical performance, calculations or assessments of performance of financial products or markets rely on assumptions about tax, reinvestment, market performance, liquidity and other factors that will be important and may fluctuate over time. InvestSMART Financial Services Limited, its associates and their respective directors and other staff each declare that they may, from time to time, hold interests in Securities that are contained in this investment product.
Frequently Asked Questions
What is a Separately Managed Account?
A Separately Managed Account (SMA) is an investment account managed to a model portfolio that is controlled by a portfolio manager. In our case that is our investment team. They decide what stocks, ETF's or funds that go into the model portfolio and at what weighting. The team then manage this daily by adjusting the portfolio as circumstances change to achieve the best risk-adjusted returns for our clients.
The model portfolios use percentage weightings so our clients achieve the same percentage returns across the board no matter the dollar value invested.
Unlike a managed fund an SMA is not a pooled investment, where everyone’s funds is in the same bucket. You have your own account and you are the beneficial owner of the stocks held in that account.
The SMA structure is better than a managed fund for several reasons:
- Tax effective: You only pay tax on gains & income you received, not on those created by someone else
- Inflows & outflows: Your investment will not be impacted by the decisions of other model portfolio investors. An example of this is when a pooled investment like a managed fund receives redemption requests at the bottom of the market and is a forced seller at the worst time.
- Flexibility with income/distributions: Choose to receive the dividends directly into an account of your choice or set up a regular payment or request payments on an adhoc basis.
- Redemption: Instead of getting cash back, you can receive the shares or ETF's
What is the difference between the Intelligent Investor Model portfolios & the InvestSMART Diversified portfolios?
The Intelligent Investor Model portfolios invest in Australian listed equities from our buy or hold recommendations on Intelligent Investor. They aim to outperform the All Ordinaries Accumulation Index.
The InvestSMART Diversified portfolios use exchange traded funds (ETFs) to provide investors with broad exposure across a range of asset classes and regions to achieve a specific return taking the least amount of risk possible.
Can I invest in more than one model?
Yes. You can invest in as many or as few of the portfolios as you like. You can allocate a specific weight to each model and choose to have it rebalanced on a regular basis or have the percentages floating as the models change in value.
How long does it take for my cash to be invested? Do you buy the portfolio holdings over time?
The day after your funds have settled your portfolio will be rebalanced. This means all the necessary shares will be purchased to bring the portfolio in line with your chosen model/models.
I want to invest gradually (dollar cost average) can I do this?
Yes, but you will need to do it manually. To do this you will need to set up the account with your initial investment and add further funds to it over time.
Can I switch the model I am invested in?
Yes. All you need to do is complete a form and tell us how you want to allocate your funds.
Do I own the shares?
Yes. Investors have full beneficial ownership of the shares in their portfolio. Those shares are held by a third-party custodian. This arrangement gives investors protection against InvestSMART while maintaining the full benefits of direct share ownership including franking credits and the ability to transfer shares out if you wish to take shares with you if you choose to leave rather than liquidating the entire portfolio.
Who is the custodian?
How can I receive income?
You can receive dividends or make withdrawals for income in a number of ways. You can receive the dividends paid from your holdings directly as they come. You can set up a regular payment or you can request payments as you require. Or you can have a combination of any of the above. Please allow up to four days to change a regular payment plan.
If I need to withdraw funds how long will it take?
This depends on cash available in your account. If shares need to be sold down you will need to allow time for settlement (transaction day plus two days). After this the requested amount will be transferred to your nominated bank account. Depending who you bank with you will need to allow a further one to two business days.
Can I set up a regular contribution plan?
Yes, when setting up an investment or at any point during your investment you are able to set up a direct debit regular contribution plan for a minimum of $100 per month. This can be altered at any point.
When is my regular contribution deducted from my bank account?
On approximately the 15th of each month.
How can I add to my portfolio?
You can make a direct debit contribution by completing a form. You can also make a contribution via BPay. If you invest in more than one model portfolio your contribution will be allocated across the model portfolios according to your initial instructions. You can alter this when making the contribution by completing a form.
Do I receive franking credits?
Yes. When you submit your tax return you will receive your franking credits.
Do I receive a tax statement?
Yes. You will receive a comprehensive tax statement.
Why does my portfolio not have exactly the same weightings as the model?
You may notice your portfolio will not hold the stocks to the exact same weight as the model. Holdings may be marginally out for example a stock may be 4.2% rather than 4.6%. This is due to the practicality of buying stock. We cannot buy a fraction of a stock and depending on the dollar size of your portfolio this could lead to it not being 100% on the model. Our minimum transaction size can cause the portfolio to not run exactly to the model as well.
What is the minimum transaction size?
For accounts under $75,000 the minimum trade size is 0.20% of your portfolio value. For accounts over $75,000 the minimum trade size is $150.
Can I use a margin loan?
Yes. We will work with any margin lender who approves a loan to invest in our investment scheme. Check with your lender.
What are the requirements for non Australian Permanent Residents?
Investors must have an Australian residential address, bank account and tax file number. You do not have to be Permanent Residents, you may qualify on a Temporary Work Visa with the above requirements. If you leave Australia, you can keep your investments active as long as you keep your Australian bank account active.
What are the fees?
Management fees start at 0.77%pa of the balance of your portfolio and decrease as you invest more. There is also an expense recovery fee of approximately $30 - $60 per year.
Do you charge performance fees?
Do you charge exit fees or establishment fees?
Do you charge brokerage?
Yes. There is a fee of $0.33 per transaction plus a fee of 0.05% + GST of the transaction value.