Keeping track of your investments

Keeping track of your investments

Keeping track of your investments can often become a chore especially if you have a number of different investments; the investments are in different currencies with different tax structures; you periodically buy or sell; and you have recently moved or intend to move in the near future.

Unless one has incredible discipline and is prepared to stay on top of the paperwork, it becomes inevitable that things start to slip through the cracks, and you start to lose touch with where each investment is located and how it is performing. One ends up looking at each investment as a separate standalone investment rather than as a consolidated portfolio with a proper asset allocation that is regularly reviewed and rebalanced back to either a strategic or tactical asset allocation that has been determined by a bevy of experts.

Increasingly, clients and financial advisers are turning to what is called a ‘wrap platform’ to find a simple solution to the issue of tracking and monitoring investments. Modern technology, faster internet speed and greater economies of scale are making wrap platforms an increasingly more sought after solution for those whose portfolios warrant it.

The two largest platforms in New Zealand are:

  • The FNZ platform, administering close to NZ$50 billion and rebranded by the likes of ANZ Investments, AMP, BNZ, TOWER, Public Trust and a multitude of smaller organisations in New Zealand. Overseas, this platform has massive clients such as ZURICH, NAB, HSBC, UBS, FriendsLife, Close Brothers asset management, Standard Life, Telstra Super and many more.
  • Aegis, owned by ASB bank. This is a tried and proven platform with in excess of NZ$7 billion under administration.

Key benefits of a wrap platform

Wrap accounts can provide significant advantages to investors wishing to simplify their investments and their administration. Some of the advantages of a wrap account are:

  • Consolidate all of your investments in one place: Wrap accounts allow investors to access managed funds, listed equities and bonds, currencies and term deposits through a single account. Online access to view reports on consolidated holdings make it quick and easy to manage a portfolio, and to view the performance of individual assets as well as the portfolio as a whole. A single consolidated tax report is also received at the end of each year, providing potential savings on accounting fees.
  • Access to wholesale investment pricing: Many wholesale and institutional funds are not usually accessible to retail investors due to restrictive minimum investment amounts. Through the wrap account, retail investors can in a number of instances obtain access to wholesale or semi-wholesale investment pricing.
  • Diversification: Wrap accounts offer an extensive range of investment choices allowing investors to diversify across and within asset classes, as well as across different equity styles. As investors do not need to meet the minimum investment amounts required from direct investors in wholesale and institutional funds, they are able to more effectively diversify their portfolio across multiple funds and securities, potentially reducing overall portfolio risk.
  • Access to boutique investments: Many new and existing boutique investments are only accessible through wrap accounts.
  • Simpler investing: The table below summarises some of the benefits of investing via a wrap account versus investing directly with the fund manager.
Investing directly Investing through a wrap account
You have access to retail managed investments with fees as prescribed in the relevant investment statement. Most funds available through wrap accounts are wholesale funds which generally have lower fees than retail funds or receive a management fee rebate.
You have access to direct assets such as shares and bonds, however it can be hard to invest in overseas direct assets. Using a wrap account to purchase direct assets means lower fees, plus it is simple to invest in sharemarkets worldwide as wrap has ability to manage currencies.
Separate reports are received from different investment managers about your investments and transactions. You receive a consolidated report with information about your investments and transactions.
Distributions and income are paid to you separately from each of your investments. Distributions and income from your investments may be paid to your cash account or reinvested.
You may have to pay entry and exit fees when you switch between investments. You may pay entry and exit fees when you switch between investments but these are generally lower than if investing directly.
Time to complete purchases is dependent on the procedures of the investment managers. Time to complete purchases and sales is dependent on FNZ procedures and those of the underlying investment managers.
You receive notices and other communications directly from the investment managers. Notices and other communications are not sent directly to you.
You must complete applications for each investment. You only need to complete one application to open the wrap account, and then you are buying and sell assets.
You must instruct each investment manager separately to rebalance your portfolio. You can balance your total portfolio with one instruction.

Please contact a Milestone adviser to ascertain what is best for you and your situation.

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