It’s an investment wrap

It’s an investment wrap

One of the success stories in investment management is a system that allows you to “wrap all your investments together”.
You will find these products called investment wrap accounts, platforms, master trusts or Investor Directed Portfolio Services (IDPS).

It is likely that your financial adviser will have talked about the benefits of diversification – not investing all of your money in the same asset. A diversified portfolio can smooth returns and improve performance over the long term. Advisers often recommend spreading investments over fund managers as well as over different asset classes because fund managers have different styles and will perform differently over time.

To overcome the massive paperwork demands of having investments with different funds, wrap accounts provide one administrative “platform” through which investments are managed. They can be used for superannuation andnon–superannuation investments. The advantages include:

  • You can pay one contribution and have it spread over the investments of your choice.
  • You can choose from a range of investment products offered by different and complementary fund managers.
  • You can switch investments usually at no cost.
  • All of your investments are consolidated into one report. You will usually get quarterly performance summaries and an annual report that will contain all the data you need for your tax return.
  • There is just one website to monitor all of your investments (which means only one password!).

You will be charged to use a wrap account service but because it is channeling larger amounts of money to fund managers, it can negotiate lower investment management fees.

Whilst you and your adviser will still need to select investments and monitor their performance, wrap accounts certainly make your portfolio management easier.