Launch of new SMA service on iRate

Investment research and investment management company van Eyk Research has launched a new separately managed account (SMA) service, as a growing number of financial advisers look to recommend direct investments.

Information and performance data on around 80 SMA portfolios are now available on van Eyk’s online research and portfolio construction tool, iRate. Over 20 SMA portfolios have been rated by van Eyk.

According to Mark Thomas, van Eyk chief executive and chief investment officer, investors and advisers are increasingly attracted to the direct share ownership, control and transparency provided by the SMA structure.

“As investors become more sophisticated, they want greater flexibility and control of their assets. With an SMA, investment decisions are outsourced to professional managers, however, the investor retains beneficial ownership of the underlying investments,” he said.

“Unlike managed funds, there are no embedded unrealised capital gains but rather all dividends, franking credits and any capital gains or losses flow through to the end investor.”

While the take up of SMAs by Australian investors has been relatively low compared to other markets such as the United States, Thomas said growth was being supported by favourable trends including demand from the self-managed superannuation fund (SMSF) sector and an openness by advisers to hold investments “off platform”.

Citing a report by the Australian Taxation Office which showed over 60 per cent of SMSF assets were held in direct shares and cash as at December 31, 2013, Thomas said SMSF trustees wanted control, customisation and transparency but they also needed quality advice.

“SMAs may overcome some of the limitations of managed accounts however, they are not for everybody,” Thomas said. “Investors need to seek professional advice to ensure that an SMA is the right solution for them.”

The availability of SMA research on iRate follows the recent launch of new SMA products by the banks and a number of boutique investment management firms.

Thomas said van Eyk had plans to expand its SMA research capabilities in the next 12 months.

van Eyk is currently one of the only research houses to offer SMA ratings.