Shaw Stockbroking has made its first entry into the broad investor market with the launch of a managed discretionary account (MDA) aimed at servicing the needs of the growing self-managed superannuation fund (SMSF) market.
The product, known as Your Portfolio, was originally to be offered to the public in the form of a separately managed account (SMA), which also sometimes falls under the individually managed account (IMA) banner, whereby model portfolios are applied to a pool of investors’ funds with the shareholding registered in the individual clients’ names.
However, feedback from the financial planning community, which preferred a product where the individual could determine the stocks that were to be invested in, meant Shaws released an MDA instead.
The product now contains significant tax advantages over SMAs and IMAs because the client has control over which stocks to hold and the length of time to hold them so as to maximise the benefits of franking credits while avoiding unnecessary capital gains tax events.
Your Portfolio also allows investors to avoid industries they are averse to, such as gaming, and retain stocks they personally favour.
The minimum entry investment level for the product is $200,000, which is lower than many private portfolio management services that start at $500,000, and is around the average balance of an SMSF.
“The lower entry point is to provide for the SMSFs and those clients who are going to be progressively growing the amount of assets they are willing to put into the stock exchange,” Shaw Stockbroking managing director Harold Shapiro said.
The portfolios will be invested predominantly in ASX 100 stocks, but Shaws will recommend appropriate managed funds if clients desire some global equity exposure.
The product will be offered through financial planners or via wrap accounts and Shapiro was quick to confirm his company had no intentions of dealing directly with clients.
“We are making the investment decisions, but it is the planner who is allocating the client’s assets and he is the one who has got the full picture and knows how much of the asset base should be in equity. All we’re doing is making the choice of which equity the client should be in,” he explained.
