We’ve been sharing blogs that dive a little deeper into specific investment products throughout this month. The world of investing and wealth management is overwhelming, and if you don’t engage with it daily, it’s easy to lose track of what you have and why you have it. Our hope at Victus Group is that you will be empowered to ask us questions and connect more with your financial plan as you engage with these blogs.
Private Share Portfolios, or PSPs, are custom investment portfolios in which shares and other securities are held in the client’s name and are bought and sold on behalf of the individual client by the asset manager. The asset manager will invest directly in the market and avoid investing through intermediaries, like unit trusts.
One of the biggest questions we ask is about fees, as clients are becoming increasingly aware of how small adjustments now can make significant differences in their returns in 10 to 20 years. PSPs allow us to be considerably more engaged with cost-saving practices based on your specific needs and risk appetite, whereas other investment products tend to have a broader, group-buy approach. Unit trusts, for example, are built for a larger, one-size-fits-all model with rigid and complicated fee structures. PSPs offer transparent fee structures with total fees generally not exceeding 1.5% per annum (this depends on the size of the portfolio).
Another attraction of PSPs is that you can receive immediate feedback on your portfolio because it’s segregated in your name, providing increased agility and scope for high-level engagement as you are not in a pooled investment product; it’s literally a private share portfolio.
With this increased agility, it’s essential to consider the benefit of efficient Capital Gains Tax (CGT) planning because this tax is levied every time a share is sold. Clients will pay CGT every year, making full use of their CGT annual exclusion, and locking in relatively low CGT rates. In a nutshell, submitting a CGT return each year allows you to benefit from the exclusion on lower gains (because it’s year on year), rather than a lump sum payout that will happen after several years.
PSPs are smaller boutique-style wholesale products that offer the investor agility; they are user-friendly and more affordable. In a time of increased market volatility, they have become an excellent addition to a well-diversified portfolio. If you’d like to know more, please feel free to chat with anyone on our Victus team before deciding on your next investment.