Financial Decisions – Adviser Support

Financial Decisions & The Bellmont SMAs

Bellmont offers two SMA portfolios – the Bellmont Core Equities Portfolio and the Bellmont Buy Write Portfolio. The portfolios are designed as core holdings, providing clients with diversified, low cost, tax effective exposure to the Australian equity market. Beneficial ownership of the underlying shares ensures full transparency of holdings and transactions, direct receipt of dividends and franking credits, and enables tax optimisation on an individual client basis.

The Bellmont Core Equities Portfolio

Held within the Generation Fund the Bellmont Core Equities Portfolio is a diversified, blue-chip equities portfolio, giving investors direct exposure to the earnings growth, dividends and franking credits of around 30 of Australia’s biggest companies.The portfolio is designed to exhibit high correlation with the ASX200, yet with a distinct value bias – systematically adopting overweight positions in companies that are trading at lower than average valuation multiples, and underweight positions in those that are trading at above average multiples.

The Bellmont Buy-Write Portfolio

Held within the Guardian Fund, the Bellmont Buy-Write Portfolio uses the Bellmont Core Equity Portfolio as a base and adds a Buy-Write overlay that swaps the possibility of ‘blue sky’ returns in any period, for the certainty of regular premium income. The result is a conservative strategy, that generates equity-like returns, but with far lower volatility and downside risk.

Feautures of the Bellmont SMAs

 Smart Beta strategy
The Bellmont SMAs give your clients a smart systematic strategy adopting overweight and underweight positions based on valuation multiples.

 Buy-Write overlay
By adding a Buy-Write overlay the Bellmont Buy-Write Portfolio generates equity-like returns, but with far lower volatility and downside risk.

 Core Holdings
Designed as core holdings the Bellmont Core Equities Portfolio sits within the Generation Fund and the Bellmont Buy-Write Portfolio within the Guardian Fund.

 Blue Chip shares
Exposure to the earnings growth, dividends and franking credits of around 30 of Australia’s biggest companies.

 Transparency of holdings
All share holdings, transactions and fees are accessible 24/7 via the online platform.

 More tax effective
Direct ownership of shares provides individual tax treatment with flexibility to ensure the best after tax return for each of your clients.

 Low Turnover
Low average turnover maximises the after-tax returns for your clients.

The importance of tax considerations for investment portfolios

According to APRA figures, investment taxes borne by super funds collectively total $3.25 billion a year, and costs from investment management and implementation total $2.54 billion a year*.

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These figures are for super funds, which have tax rates of a maximum of 15% – far lower than average tax rates for most investors operating outside the Superannuation environment. Yet despite this, the cost of taxes for super funds is almost 30% higher than total management costs! Reducing management fees is obviously important for investors to maximise returns, but it’s completely overshadowed by the need to manage portfolios in a tax-efficient fashion. This means maintaining beneficial ownership of assets (rather than using unitised structures i.e. Managed Funds), keeping portfolio turnover as low as possible, and aiming to ensure any CGT incurred is concessional in nature.

Managed Accounts provide advisers with greater control, whereas managed funds lump all investors into the same basket. The benefits include:

  • Full beneficial ownership of underlying assets
  • Complete transparency of portfolio holdings
  • Dividends & franking credits paid directly to the client
  • Tax effectiveness
    • Investors do not inherit capital gains as is the case with managed funds
    • Individual treatment of corporate actions dependent on end client’s circumstances
    • Choice of CGT tax parcel accounting method (minimise losses OR minimise gains)
  • Portability – If clients no longer wish to have their portfolio professionally managed, the holdings can be transferred directly to a broker without the assets being liquidated

* http://www.bellmontsecurities.com.au/wp-content/uploads/2014/09/APRA-June-2014-Quarterly-Superannuation-Performance1.pdf

Financial Decisions Value Proposition

The benefit of having the Bellmont SMAs as a core holding should be used as an enhanced value proposition for Financial Decisions clients. The Bellmont SMAs are ideal core holdings as they are long term investments with low turnover providing clients with optimal after tax returns.

Key value proposition points

  SMAs are not available at most financial planning firms. Financial Decisions is ahead of the market and provides their HNW clients with the best available products
  The Bellmont SMAs are uniquely available for HNW clients only
  Clients have underlying ownership resulting in better after tax returns – ideal for a core holding
  Complete transparency for HNW clients. With greater transparency comes peace of mind and control

Contact Bellmont

You can speak directly to a Bellmont Team Member by calling 1300 368 295 or email [email protected]

Our Portfolios

Bellmont offers two core Australian share portfolios. Both portfolios hold the same underlying portfolio of shares, with the Bellmont Buy-Write Portfolio adding an index option overlay to smooth returns and provide far lower volatility and downside risk.

Core Equities Portfolio

Direct Market Exposure

The Bellmont Core Equities Portfolio is a diversified, blue-chip equities portfolio, giving investors direct exposure to the earnings growth, dividends and franking credits of around 40 of Australia’s biggest companies. Read more

Australian Shares

Watch a webinar overview of the Bellmont Core-Equities Portfolio below

Buy-Write Portfolio

Smoother returns & downside protection

The Bellmont Buy-Write Portfolio uses the Bellmont Core Equity Portfolio as a base and adds a Buy-Write overlay which generates equity-like returns, but with far lower volatility and downside risk. Read more

Options Overlay
Australian Shares

Watch a webinar overview of the Bellmont Buy-Write Portfolio below

Bellmont SMAs Fact Sheet

Bellmont Core Equities Portfolio

Bellmont Buy-Write Portfolio

Structure Separately Managed Account (SMA) Separately Managed Account (SMA)
Asset Class Australian Equities Australian Equities
Sub-Asset Class Large Companies Large Companies
Number of Stocks 25-30 25-30
Investment Style Long Only Equities Long Only Equities with Index Options Overlay
Investment Approach Bottom Up, Smart Beta, Quantitative Bottom Up, Smart Beta, Quantitative
Investment Type Core Holdings Core Holdings
Target Allocation 95%-100% 92%-98%
Target Cash Allocation 0%-5% 2%-8%
Gearing Ratio Nil Nil
Historical Turnover 26%* 26%*
Benchmark S&P ASX 200 Accumulation Index S&P ASX 200 Accumulation Index
Inception Date April 2014 July 2009
Management Fee 0.50% 0.80%
Transaction Fee $3.00 or 0.10% excluding GST $3.00 or 0.10% excluding GST

* Based on backtesting results between 1994 – 2013 (13% buys & 13% sells)

Transaction Example

Transaction in the Bellmont portfolios are only charged at a minimum of $3.00 or 0.10%, a fraction of the cost compared to an online broking account (ie. Commsec or E*trade)

Let’s consider an example of a client with a $50,000 holding in the Bellmont Core Equities Portfolio vs a Commsec Account.

Bellmont Core Equities Portfolio

Commsec Preferred Client*

Brokerage rate $3.00 or 0.10% $19.50 or 0.12%
Number of shares 30 30
Cost 30 * $3.00 = $90 30 * $19.50 = $585

* $19.95 (Up to $10,000) – $29.95 (Between $10,000 and $25,000) – 0.12% (Over $25,000)

Legal

  • The Bellmont Managed Accounts PDS here.

SMA Revision

What are Managed Accounts?

managed accounts matrix

Benefits of Managed Accounts

 Transparency of holdings
All share holdings, transactions and fees are accessible 24/7 via the online platform.

 Professional Investment Managers Access to professional investment managers with the benefits of direct share ownership including ease of compliance and administration.

 More tax effective
Direct ownership of shares provides individual tax treatment with flexibility to ensure the best after tax return for each of your clients.

 Less admin vs direct equities All paperwork including corporate actions, dividends and tax reporting are handled via the platform.

 Less compliance risk vs direct equities The Bellmont Managed portfolios remove the compliance burden of managing client share portfolios while eliminating ROAs altogether.

 Portability Australian shares can be moved into – or out of – the SMA without triggering any capital gains events, allowing the adviser to change strategy in an efficient manner.