Wrap account is an account that allows personal financial planner to wrap all unit trust investment consisting of different asset classes from different fund management company into a portfolio for their client, which will help client to achieve their investment objective.
It is a brokerage account for which the client pays a management fee rather than pay commissions for individual transactions. This is suitable for investors who don’t have time to invest on your own and prefer to have someone manage your assets rather than managing them yourself.
The main advantage of wrap accounts is they prevent advisors and protect investors from an account being churned (ie. funds being bought/sold just to generate commissions). Because the wrap account is charged on a flat annual basis, covering all administrative, research, advisory and management expenses.
Benefits for Investors
Unbiased advise and investor oriented
Unbiased advised by planners in-line with investment objective of the investors and grow investor’s AUM.
Fund selection and tactical asset allocation
Investors can enhance the purchasing power protection of a fund through fund selection and tactical asset allocation.
Diversification and capital protection
Sufficient diversification across asset classes and regions can greatly reduce the impact of a permanent loss of capital while lowering volatility of investment.
Keeping costs low
Saving on investment as investor no longer needed to pay full sales charges while freely switching funds between fund houses.*
*applied to funds stated in the wrap account fund listing
Monitoring your strategy and portfolio rebalancing
Rebalancing process can be done after a specific tenure or when the portfolio is unbalanced.
Range of funds
Equity fund is a mutual fund that invest principally in ownership of publicly traded businesses by buying common stock. It can be actively or passively managed. Equity funds are also known as stock funds.
A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate.
Balanced funds are geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. The amounts this type of mutual fund invests into each asset class usually must remain within a set minimum and maximum.
Fixed income investments generally pay a return on a fixed schedule, though the amount of the payments can vary. Individual bonds may be the best known type of fixed income security, but the category also includes bond funds, ETFs, CDs, and money market funds.