SMA – Benefits and Risks

Last update - 5 July 2023 By James Woods

A Separately Managed Account (SMA) is a model portfolio of individual securities managed by a professional asset management firm on behalf of an investor. Apex Separately Managed Accounts allow clients to follow Rivkin’s proven investment strategies without having to trade themselves. Our four portfolio options have been designed to suit various different investor goals.


Structure Comparison

The following table provides an easy comparison, highlighting the key features of investment structures.

Separately Managed Account Managed Fund Direct Equities
Investor Control ✔ (Moderate) X (Low) ✔ (High)
Costs X (Medium) X (High) ✔ (Low)
High Transparency X
Customization X
High Tax Efficiency X
Low Minimum Investment X
Wholesale Execution X
Managed Tax Reporting X
Managed Corporate Actions X



Separately Managed Accounts, also known as SMAs, provide a range of benefits that can be attractive to investors. One of the most significant benefits is access to professional investment management. The functionality of SMAs extends beyond mere market exposure, they are diligently and continually monitored and managed by skilled professional investment managers. These experienced individuals offer the possibility of outperforming benchmarks by using their expert knowledge and strategic planning, which can result in better returns for the investor.

Another pivotal advantage of SMAs comes in the form of direct beneficial ownership for investors in their accounts. In comparison to an investment structure like a unitized managed fund, an investor directly owns the assets within their SMA. This direct ownership structure provides the investor with an enhanced degree of control over their investment decisions, which can be empowering and strategically beneficial. Additionally, this direct ownership helps to eliminate what are commonly referred to as the “hidden costs” that are often part and parcel of pooled investment vehicles, providing a degree of financial transparency that is highly valued in the investment world.

Furthermore, SMAs are widely recognized for their transparency, a feature that significantly appealing to modern investors. Investors are always able to have a comprehensive, full view of the assets contained within their selected model portfolio at any time they wish. Additionally, investors retain the beneficial interest in those assets as well as dividends and franking credits, adding another layer of control and flexibility with the investment manager also responsible for actioning any corporate actions.

Lastly, funds within SMAs are commonly aggregated to leverage institutional-level brokerage rates, serving to reduce overall expenses. This feature assumes added importance for smaller portfolios, where avoidance of minimum brokerage costs can be a substantial proportion of the portfolio’s value.



However, while SMAs do offer several compelling advantages, they are not without their own set of risks and considerations that investors need to be aware of. One such concern is the fact that the capital value of SMAs may fluctuate, particularly over short-term periods can expose the investor to potential losses should the account be liquidated during a market downturn.

Additionally, there is also the potential liability of Income and Capital Gains Tax to consider. This may be due on any increase in the value of the investments when they’re redeemed or sold. The impact of this tax on the net return can be significant and should be factored into any investment decision.

It’s also essential to note that income distributions from SMAs are not guaranteed and can vary over time. This unpredictability may impact the anticipated return from the investment. Moreover, any income that is reinvested also forms part of assessable income for tax purposes, a fact that should be accounted for when considering an SMA investment.

Another important aspect to consider are the costs associated with SMAs. These costs include, but are not limited to, brokerage, management, and performance fees. It is crucial for investors to have a full understanding of these costs, as outlined in the Product Disclosure Statement (PDS), to ensure there are no surprises down the line and investors fully understand the comprehensive list of risks associated.

Lastly, investors must also remember that SMAs may include exposure to growth assets, such as shares. These kinds of assets can provide substantial long-term capital growth, which can be highly attractive. However, this comes with an elevated risk of loss, especially if an investor needs to withdraw within a shorter timeframe. Therefore, the time horizon of the investment should be carefully considered to manage this risk.



SMAs provide several advantages, such as individual account ownership, transparency, tax efficiency, and professional investment management. However, potential risks and considerations such as capital value fluctuations, capital gains tax implications, income distribution variability, costs and exposure to growth assets should also be considered.

Investors should weigh these benefits and risks carefully and seek professional advice to ensure their investment decisions align with their financial goals, risk tolerance, and investment knowledge.




Important Notice: Please consider your own financial situation before investing in our products. Rivkin does not provide personal financial advice and does not take anyone’s personal financial situation into account when structuring its model portfolios.

For a complete list of risks and costs involved with Apex Separately Managed Accounts please refer to the Product Disclosure Statement. This PDS has been prepared and issued by The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235150)

Please click here or request the PDS to understand the full risks and cost of the product before making a decision to invest in it.

Past performance and/or backtesting is not a guarantee of future performance. Investing and trading carry financial risk, when judging performance please consider the different types of investments and levels of risk associated.

To learn more about how we calculate performance click here.

The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235150) is the responsible entity and the issuer of units in the Apex Separately Managed account. It is general information only and is not intended to provide you with financial advice, and has been prepared without taking into account your objectives, financial situation or needs. You should consider the product disclosure statement, available on, prior to making any investment decisions. If you require financial advice that takes into account your personal objectives, financial situation or needs, you should consult your licensed or authorised financial adviser. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.

All opinions and estimates constitute judgments of Rivkin and are subject to change without notice. These statements should therefore not be relied upon as an accurate representation or prediction as to any future matters. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance.

Total returns shown for the Apex Separately Managed Account have been calculated using exit prices after taking into account all of Perpetual’s ongoing fees and assuming reinvestment of distributions.


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