How do the InvestSMART Professionally Managed Accounts work

You should read the PMA target market determination to see the target market for each portfolio. In addition to this, InvestSMART has several tools and guides to help you select the right portfolio.

You will notice a common thread throughout the guides, the investment time frame. We recommend investors look at the suggested time frame associated with each portfolio to see if it aligns with their investment goal.

Here is a list of tools and guides to help select the right portfolio:

• InvestSMART's statement of advice
  • Our Statement of Advice will provide you with an Investment Plan detailing a number of steps for you to implement in stages to achieve your financial goal.
• InvestSMART's guide to growing your wealth
• InvestSMART's guide to investing in retirement
• InvestSMART's investor pack

Calculators

• Wealth savings calculator
• Saving to buy a property calculator
• Saving for kids education calculator
• Saving for retirement calculator

Additionally, we have InvestSMART Bootcamp, which is a comprehensive investment course designed to get you started on the right foot.

Explore Bootcamp here.

The InvestSMART Professionally Managed Account (PMA) is established and offered within the registered managed investment scheme known as the Professionally Managed Accounts.

Each investor has a separate account to which their investments are allocated. You will require a different PMA for each investment entity you have e.g. individual, joint, SMSF etc.

A client will open an InvestSMART PMA and can then choose between the various InvestSMART Diversified Portfolios. An account can hold one or more models but can only hold one diversified portfolio. The management fee is charged at the account level, not per portfolio.

Once you decide which model portfolio(s) are best suited to your investment needs and objectives, we will purchase the investment to be included in your account to reflect the model portfolio or combination of model portfolios that you have selected.

Yes, you can hold multiple portfolios within a single account but you can only hold one diversified portfolio per Professionally Managed Account (PMA) with single asset class portfolios alongside it. For example, you could hold the InvestSMART Growth Portfolio with both the InvestSMART International Equities Portfolio and InvestSMART Hybrid Income Portfolio alongside it but you could not hold both the InvestSMART Growth Portfolio and InvestSMART Balanced Portfolio in the single Professionally Managed Account (PMA). 

If you wish to invest in multiple diversified portfolios then you will be required to open multiple Professionally Managed Accounts (PMAs).

Diversified Portfolios

• InvestSMART Conservative
• InvestSMART Balanced
• InvestSMART Ethical Growth
• InvestSMART Growth
• InvestSMART High Growth

Single Asset Class Portfolios

• InvestSMART International Equities
• InvestSMART Australian Equities
• InvestSMART Property & Infrastructure 
• InvestSMART Hybrid Income
• InvestSMART Cash Securities
• InvestSMART Interest Income

Intelligent Investor Funds

• Intelligent Investor Growth Fund
• Intelligent Investor Income Fund
• Intelligent Investor Ethical Fund
• Intelligent Investor Select Value Fund

Introduction:

Welcome to our simple guide on how to use the InvestSMART Online Investment Platform. This article is designed to complement our step-by-step video tour and provide an easy understanding of how to make the most out of your InvestSMART Professionally Managed Account (PMA).

Navigating the Dashboard:

When you first log in, you'll see the dashboard. This is where you get a transparent overview of your investments, including individual securities, their performance, and all transactions. It's the perfect starting point to see how your portfolio is doing at a glance.

Understanding Your Portfolio:

The platform shows your total return and gives insights into how your investments are allocated. You can view your portfolio's cash reserve, including dividends or distributions that are declared but not yet paid.

Performance and Growth:

There's a handy performance chart that lets you compare your current portfolio value against your net contributions. It's a great way to visualise your investment growth over time.

Managing Your Account:

• Account Holdings: See exactly what securities, like ETFs, you hold. Click on a stock ticker code for more details about that holding.
• Transactions: Track the buys and sells within your holdings.
• Dividends and Interest: View income generated from your holdings and their payment dates.
• Fees: Understand the fees you pay, covering everything from portfolio rebalancing to tax statement provision.

Unique Features of InvestSMART:

• Capped Fees: One of the standout features is the capped management fee, ensuring your yearly management fee doesn't increase irrespective of how much your investment grows.
• Automatic Contributions: Set up regular contributions via direct debit to automate and streamline your investment process.
• Regular Withdrawals: If needed, you can set up regular withdrawals for a consistent cash flow.

Support and Assistance:

Our platform is designed to be user-friendly, but if you need help, our Comprehensive Help Center is always there. Plus, you can click the chat icon to talk to a real person during office hours.

Conclusion:

Investing smartly is all about making informed choices. We hope this guide and our video have given you a clearer understanding of how to use the InvestSMART platform effectively. If you have more questions, feel free to reach out or book a time to speak with us.

When you open an InvestSMART Professionally Managed Account (PMA), you choose from InvestSMART's range of Diversified Portfolios to invest in.

A list of the portfolios can be found here.

These managed portfolios comprise of Exchange Traded Funds (ETFs) or, in some cases direct shares. In particular, the InvestSMART Hybrid Income Portfolio invests in Australian listed hybrids and listed debt securities.

What is an Exchange Traded Fund?

An Exchange Traded Fund, or ETF, is a managed fund that trades on the stock market.

There are different types of ETFs, each with its own purpose, but most commonly, they will track or follow a particular index.

For example, if you want to follow or track the S&P ASX 200 (the top 200 Australian shares by market capitalisation), you could either buy each individual share (200 shares) or one ETF. The one ETF wraps up the 200 shares into one holding. By holding this one ETF, you get exposure to the movements of the ASX 200, less any fees.

Investing in ETFs is a form of passive investing, and they generally incur cheaper management fees, as fewer investment decisions are required to manage an ETF. They are also quite liquid and traded easily on an exchange.

You can see the holdings of each InvestSMART managed portfolio by navigating to its product page and scrolling to Key Facts > Holdings.

Yes, all investments held within your InvestSMART PMA are held in your name (or chosen entity e.g. SMSF) in a CHESS sponsored broking account.

You are the registered legal and beneficial owner of a portfolio of securities. You can log into the investor website at any time to view the individual securities that make up your Account.

Rebalancing within your InvestSMART PMA is an automatic process whereby model portfolios are compared against the investors’ accounts. The portfolios are monitored on a daily basis, reviewed monthly and reviewed by the Investment Committee formally every quarter.

We aim to keep transactions to a minimum and allow the asset classes to provide the return rather than chopping and changing out of investments.

Your Account will only be rebalanced in the following circumstances:

• The Portfolio Manager decides to rebalance or switch out a holding;
• You add cash or remove cash from your account;
• You switch Model Portfolios or make other alterations to your Account; or
• Where your cash percentage has moved away from the model portfolio percentage due to dividends received or fees paid.

Investors can see the transactions via the Transactions section when logged in.

This is the most common question we get from experienced and inexperienced investors alike. 

No matter when you are looking to invest, there will always be something in the news that will have you asking this question. Whether it is a commentary on our local housing market, geopolitical uncertainty, or fears of a global pandemic. Uncertainty is constant, yet history shows us investment markets and asset classes continue to grow over the long term.

Having an investment plan and sticking to it is far more important than picking the exact day or week to invest. Developing good investment habits by investing for the long-term, in the right mix of asset classes, adding to your investment over time and rebalancing in a systematic fashion will see you reach your goal. In addition, chopping and changing your portfolio will chew up returns with transactions costs and potentially reduce your invested capital by paying additional taxes. 

InvestSMART can help you select and stick to a plan: 

• Provides simple contribution and income reinvestment options 

• Transparent online monitoring through your 'My Account' 

• Consolidated annual tax reporting direct to your inbox 

• CHESS sponsored ownership of your portfolio holdings 

• Our famous low fees starting at just over $1 a week, capped* at $550 per year. 

No, you can only hold InvestSMART portfolios or Intelligent Investor ETFs.

InvestSMART does not allow investors to transfer existing shares, holdings, or assets, in or out of a Professionally Managed Account (PMA) to facilitate initial funding, contributions or withdrawals.

We believe this decision is in the best interest of our clients for the reasons below.

Cost

Transferring shares, called an in-specie transfer, can be costly. Brokerage services will charge a fee between $30 and $90 per security to cover the time needed to facilitate the transfer.

For example, transferring 15 stocks could cost between $450 and $1,350.

Administration

Unsurprisingly there is a lot of paperwork involved for the investor, us and the current broker holding the shares on their platform.

Investors are required to sign, scan and return a transfer request for each security along with a detailed cost base breakdown to ensure that tax implications are calculated accurately on any future transactions.

Lag Period

Share transfers require not only all the paperwork to be completed by the investors, but paperwork and administration to be acted upon by the brokerage service transferring the shares and the brokerage service receiving the shares.

It is not uncommon to see this process take anywhere from 2 weeks to 2 months, during which your investments are in limbo, which is dangerous should there be short-term volatility and you wish to trade upon them.

Alignment

We do not expect that many clients will hold the same investments or weightings as the Model Portfolio(s) they have selected for their Professionally Managed Account (PMA).

What this means is that even once you have paid the transfer fees, completed the paperwork and waited for the process to be finished - it is still very likely that we will need to sell some, or all, of your shares to rebalance your investments based on the Model Portfolio(s) that you selected.

We want to make your transition to investing with us as easy as possible, so please feel free to contact us at invest@investsmart.com.au

If you are an existing investor you would open a new InvestSMART Professionally Managed Account (PMA) is if you are investing via a different entity, for example you have a personal account but also wish to invest in joint names or an in your self-managed super fund, or if you are wanting to invest in multiple diversified portfolios. 

As an existing investor you can add funds to your existing PMA or add a new investment portfolio to your PMA via the Add Funds feature in My Account. 

Here are some examples of when you would open a new account:

• You're a new client with no account
• You want to change or open an account under a different legal entity like a company, trust, or SMSF
• You want to add your partner as a legal owner
• You want to invest in multiple diversified portfolios
• You previously closed your account 

The current minimum investment amount for the InvestSMART Professionally Managed Account (PMA) starts at $10,000 per model portfolio; unless otherwise stated in the Investment Menu, Key Facts section of the online information page or the Key Details section of the Investor Pack.

If you already have an InvestSMART PMA and just wish to add to your existing investment model, you do not require another $10,000 to contribute to that same investment.

Example: In your InvestSMART PMA you have $15,000 in the InvestSMART Conservative Portfolio and $11,000 in the InvestSMART Interest Income Portfolio.

You wish to withdraw $6,000 from the total portfolio.

Each portfolio requires a $10,000 minimum balance, so $5,000 would be withdrawn from the InvestSMART Conservative Portfolio and $1,000 from the InvestSMART Interest Income Portfolio.

Yes, you can withdraw your funds at any time using the Withdrawal Request feature via the My Account section.

Your investments are not subject to a minimum investment period, and there is no exit fee.

You should, however, always consider the suggested timeframe of your chosen model portfolio(s) and associated brokerage charges to sell your holdings.

The holdings are very liquid and trade as ETFs on the ASX.

We usually have funds returned to clients in 4-5 business days from the submitted withdrawal request. Withdrawal requests are processed the following day they're received.

If you have multiple model portfolios in your InvestSMART PMA you can choose which investment the funds are drawn from via the Withdrawal Request section.

Yes. You will receive a comprehensive tax statement at the end of financial year and you will receive the franking you're entitled to once you submit your tax return.

The InvestSMART Professionally Managed Accounts (PMAs) operate off model portfolios. For example within your InvestSMART PMA you could choose to invest in the InvestSMART High Growth Portfolio. The InvestSMART High Growth Portfolio has an ideal weighting to each holding. No matter if someone invests $10K or $1M, they will have the same percentage exposure to each holding. Transactions occur when a client’s account gets out of sync with the model or when the investment manager decides to change the model.

As cash is added to the model, the cash holding percentage will increase while all other asset classes will decrease as a percentage. The change in asset percentages will bring the client’s account out of sync with the model, and transactions will need to take place to realign it. Whether or not we transact will depend on how out of sync the account is compared to the model. For example, adding $1,000 to a $1M account will not move the needle but adding that amount to a $10K account will.

We will use the funds to buy more holdings. Please remember that what you can view on your InvestSMART account is always one day behind, e.g. yesterday’s close and yesterday’s transactions.

When you BPAY your funds before 6 pm on a business day, they will typically arrive in our PMA Trust Account the following business day.

We will email you that we have received your partial or total funds, depending on the amount you have sent.

Once we have received the total funds for investment, we will then send your funds to the share brokerage account opened in your name. This transfer typically takes overnight as well.

When your funds arrive at the share broker the next business day, we will begin to purchase holdings in line with your chosen portfolio.

Once the shares/ETFs have settled (T+2), we will enable the online platform for you to view and administer your holdings. We will send you a welcome email explaining how to access the online platform.

This process takes about 4-5 business days from when we receive your total funds.

Why does it take 4-5 business days and not immediately?

We're proud to offer low and capped management fees for our InvestSMART investment products. At the heart of everything we do, our purpose is to make investing rewarding, accessible and affordable.

To keep fees low and capped, we take a process-driven approach. For instance, our trading team can keep costs down by trading once a day during a specific period. This means that funds received are actioned the following business day.

Settlement periods

As with any ASX listed share or ETF, there is a two business days settlement period. The ASX explains this here. This settlement period means your holdings won't settle until two days after the transaction takes place.

Your investments are held in a CHESS sponsored brokerage account. This adds an extra layer of protection and can offer more tax advantages as you can transfer holdings to your share trading account and not be forced to sell them. However, this means that getting funds from your bank account to the brokerage bank account adds an extra step. We are in the process of investigating CMA accounts to improve this.