Alastair Davidson

Digital wealth provider InvestSMART, has announced the launch of low-cost Professionally Managed Accounts (PMAs*), as part of its mission to help lower the total cost of investing for Australians.

Following the release of its recent whitepaper, ‘How fees can destroy your wealth: Understanding the total cost of investing’, InvestSMART has announced the launch of the InvestSMART PMA  – a new investment service which offers direct investors the benefits of professional portfolio management at competitive fees.

InvestSMART PMAs allow investors to create a unique portfolio of securities from a range of model portfolios, giving them greater control and transparency. Investors can also benefit from low-cost brokerage and administration fees, as well as receiving one tax report for all their holdings.

Commenting on the launch, InvestSMART Head of Funds Management, Alastair Davidson, said: “Our research shows that an accumulation of small fees including financial advice fees, implementation fees, platform fees and investment management fees can really eat away at investor returns. It is therefore essential that investors understand the fine print before investing.

“Taking advantage of recent advances in technology and our ability to source low-cost providers, InvestSMART has launched this new service to provide investors with greater visibility over how their money is being invested and where their fees are going.”

Greater control

The model portfolios in the PMA are all professionally managed and constructed by InvestSMART’s experienced investment team.

“Investors can combine our model portfolios in any proportion they choose, creating an account that is unique and tailored to their individual needs,” Mr Davidson said.

Under the PMA model, investors will hold legal ownership of their shares, with the ability to move securities and make regular contributions or withdrawals with ease. Investors can also terminate the arrangement at any time and keep their shares.

Cost savings

Unlike most other managed investment schemes, investors’ tax position will only be affected by the activity within their own account, so they will not inherit capital gains from other investors.

Investors can also benefit from low brokerage costs of $5.50 or 0.11% (whichever is greater) on buys and sells.

“We think this model will appeal to investors who want to build a portfolio of equities without having to continually watch the markets and make trading decisions,” Mr Davidson said

“The taxation and cost benefits are also highly attractive, giving investors the opportunity to keep more of their hard-earned capital in their pocket.”

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Alastair Davidson

InvestSMART Group Limited (ASX Code: INV) has debuted its first ASX listed fund – an active ETF – designed to deliver investors income without sacrificing capital gains.

The InvestSMART Australian Equity Income Fund (Managed Fund) (ASX:INIF) listing follows high investor demand during its initial application period. INIF attracted more than three times its funds under management (FUM) target, closing at more than $30 million FUM.

INIF commenced trading on the ASX today at a unit price of $2.50. It mirrors the group’s existing unlisted Intelligent Investor Equity Income Portfolio, which has an estimated income of 5.3% p.a.^ and has returned 11.5% p.a. since inception, significantly outperforming its benchmark of 7.9%*.

Commenting on the fund’s launch, InvestSMART Head of Funds Management Alastair Davidson said he was excited to see the group’s first active ETF trading on the ASX, giving every investor the opportunity to access the strongly-performing portfolio.

“The Intelligent Investor research team has been running a very successful equity income model for the last 17 years. The active ETF offers investors access to this model in an easy-to-buy, listed format,” he said.

Managing risk

With Australians living longer than ever before, longevity risk is one of the biggest risks facing investors today. Coupled with inflation, investors need to reassess their investment approach to avoid outliving their capital.

“Investors hunting exclusively for yield-based stocks can become caught up in companies that pay well initially but have poor long-term prospects,” Mr Davidson said.

“We believe it is imperative to consider both the growth outlook of a company and its ability to pay dividends. Therefore we focus on undervalued, cash-rich businesses with the expectation that they will produce strong cash flows to support dividends in the future.”

Underweight banks

INIF provides exposure to a concentrated portfolio of up to 30 Australian equities with a sustainable income, actively managed by a team that has a research track record of more than 20 years.

While the fund does hold some bank stocks, its exposure is currently less than 9%, compared to more than 22% in the ASX200. In InvestSMART’s view, having a large weighting to banks is imprudent, and in the current environment, risks in the sector are increasing.

INIF is a cost-effective solution with competitive fees and expenses of 0.97% and no performance-based fees. The listed structure also benefits investors who are seeking simplicity and less paperwork.

“The launch of the Active ETF will give investors access to a professionally-managed, strong-performance portfolio in a simple and cost-effective way,” Mr Davidson said.

^Including franking. *As at 30 April 2018, after admin and investment fees, excluding franking. Inception Date is 01 July 2015. The Fund will be managed in the same way as the Portfolio product.

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Alastair Davidson

InvestSMART Group Limited (ASX Code: INV) has announced it will launch an Active ETF, that delivers investors income without sacrificing capital gains.

InvestSMART has lodged the product disclosure statement for the InvestSMART Australian Equity Income Fund (managed fund), to trade under ASX code: INIF, with plans to launch an Initial Offer of units in the Fund at $2.50 each from May 14 before listing on the ASX in June.

The Active ETF will mirror the group’s existing Australian Equity Income portfolio, which has a strong track record of performance – returning 11.05% p. a. after fees (outperforming the S&P ASX 200 Accumulation Index by 4% p.a.) since inception in July 2015.

Commenting on the launch, InvestSMART Head of Funds Management Alastair Davidson said INIF aims to deliver both a stable income and capital growth by investing in a portfolio that’s light on the banks and focused on under-valued, cash producing companies.

“While the priority of the fund is delivering income, the portfolio is constructed in such a way as to allow investor to also benefit from capital gains,” Mr Davidson said.

“We believe everyone should have the confidence to control their future and it shouldn’t be hard or expensive to do so. The launch of the Active ETF will allow investors to access the strongly performing portfolio in a simple and cost-effective way.”

Underweight the banks

While INIF may hold some bank stocks, its exposure is currently less than 9%, compared to more than 22% in the ASX200. In InvestSMART’s view, the majority of Australian banks are overvalued, and in the current environment, risks in the sector are also on the increase.

Holding up to 30 stocks, INIF has a benchmark unaware approach with a bias towards under-valued companies that have a high certainty of generating cash, which can help produce excess returns during difficult or downward trending markets.

The ASX-tradeable portfolio structure afforded by the Active ETF benefits investors who are seeking ease of transacting and less paperwork. INIF is also a cost-effective solution with competitive fees and expenses of 0.97% and no performance-based fees.

Experienced investment team

Unlike passive Exchange Traded Funds (ETFs), Active ETFs bring the benefit of professional management by an experienced investment team.

INIF will be managed by James Carlisle, Head of Research at InvestSMART, who has been researching stocks for more than two decades and Guarav Sodhi, Deputy Head of Research, who has been with InvestSMART as an analyst for nearly a decade.

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