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I'm considering investing with InvestSMART

Please explain the fees further

Tiered fee explainer

Our capped management fees are tiered depending on your investment amount.

Fees matter and have a significant impact on your net investment returns. We have a simplified fee structure of 0.55% p.a. capped at $550 per year no matter how much you invest*.

Account balance tiers	Investment management fees p.a.
$0 to $100,000	0.55%
More than $100,000	$550

See the interactive slider here: https://www.investsmart.com.au/capped-fees

* InvestSMART's capped Management Fee (capped at $550 p.a.) does not include fees charged within any ETF held in this portfolio, estimated to be approximately 0.18% (indirect cost ratio). Brokerage costs are not included in this calculation. For more information about fees and costs, please see the Product Disclosure Statement and Investment Menu.

Can you explain how and when I pay brokerage?

Our investors are the legal owner of the holdings in their account. As we open a brokerage account on your behalf, your investments are registered in your name with CHESS.

Because of this, there are brokerage charges.

You will incur brokerage when we have to trade (buy or sell) holdings. We make trades for these reasons:

Creating your portfolio and buying holdings
Adding funds to your account and buying holdings
When rebalancing your portfolio, so it stays in line with the portfolio objectives. Rebalancing may involve the buying of some holdings and the selling of others.
You are withdrawing funds from your account and selling holdings to free up cash for the withdrawal.
Closing your portfolio and selling all holdings.

InvestSMART has negotiated wholesale brokerage. It's the greater of $4.40 per trade or 0.088% of the trades' value to buy or sell the securities within your portfolio. There are up to seven holdings in each portfolio. You can see each portfolio's holdings by going to Key Facts > Allocations > Current Holdings on each of the portfolio's product pages.

For example, $1,000 acquisition of share ABC = $4.40 but $10,000 acquisition of share ABC = $8.80 It is important to note that our investments are not actively trading, and we do not receive a cent of the costs associated with trading.

When do you buy/sell holdings?

You will incur brokerage when we have to trade (buy or sell) holdings. We make trades for these reasons:

Creating your portfolio and buying holdings
Adding funds to your account and buying holdings
When rebalancing your portfolio, so it stays in line with the portfolio objectives.
Rebalancing may involve the buying of some holdings and the selling of others.
You are withdrawing funds from your account and selling holdings to free up cash for the withdrawal.
Closing your portfolio and selling all holdings

Am I charged for multiple portfolios?

No, you're charged the one management fee.

You can one diversified portfolio and/or multiple single asset class portfolios per account under the capped fee
If you wish to invest in multiple diversified portfolios then you will need to open multiple accounts each subject to their own fee

If the portfolio model is part of our capped fee range, the one management fee will apply to your account as a whole.

Fees matter and have a significant impact on your net investment returns. We have a simplified fee structure of 0.55% p.a. capped at $550 per year no matter how much you invest.*

For example, if you hold the InvestSMART Balanced Portfolio and the InvestSMART International Portfolio, you will only pay a maximum of $550 p.a. on your portfolio and not $550 p.a. per model.

Account balance tiers	Investment management fees p.a.
$0 to $100,000	0.55%
More than $100,000	$550

If I hold an Intelligent Investor fund in my PMA how is that charged?

You can choose to hold both InvestSMART portfolios and Intelligent Investor Funds within your portfolio, side by side.

The InvestSMART portfolios are part of the capped fee range.

The Intelligent Investor Funds are not part of the capped fee range, and management fees apply at 0.97% p.a. This is the only applicable fee for the Intelligent Investor Funds.

Example:

You have $100,000 in your InvestSMART PMA.

InvestSMART Balanced Portfolio - $85,000

Intelligent Investor Australian Equity Growth Fund (Managed Fund) (ASX:IIGF) - $15,000

The fees are capped in the InvestSMART Balanced Portfolio and would be $550 p.a.

The 0.97% applies to the Intelligent Investor Australian Equity Growth Fund and would be $145.50 p.a.

What are indirect costs?

Our investments utilise Exchange Traded Funds (ETFs) as we believe they offer our clients diversified, liquid and low-cost exposure to a number of asset classes in Australia and overseas.

Exchange Traded Funds as the name would suggest are listed on an exchange, in this instance the Australian Stock Exchange (ASX), by Fund Managers who in turn charge a modest management fee on a percentage basis.

We are conscious that this fee will impact your overall returns and it is closely monitored for each portfolio; at time of print it varies from 0.09% p.a. to 0.30% p.a.

How are indirect costs charged?

Your Account will also incur indirect costs incurred due to the fees and costs associated with the underlying investments in the selected Model Portfolio/s. The current indirect costs information for each Model Portfolio is set out in the Investment Menu.

Indirect costs are deducted by the underlying managed fund/ETF and are included in the ETF price.

They are not separately deducted from your Account. The fund manager charges these management fees regardless of whether you held them through InvestSMART or your own brokerage account.

For example:

You hold the InvestSMART Conservative Portfolio. One of the holdings is an ETF called the iShares MSCI Australia 200 ETF (IOZ). It has a 0.09% p.a. management fee charged by Blackrock within the fund. If it is currently trading at a Sell/Buy price of 28.68/28.70, then 0.09% would be taken from the Sell price (as this values your holding of IOZ). This would then be calculated on a monthly basis.

Calculators

Additionally, we have InvestSMART Bootcamp, which is a comprehensive investment course designed to get you started on the right foot.

Explore Bootcamp here.

What is a Professionally Managed Account?

The InvestSMART Professionally Managed Account (PMA) is established and offered within the registered managed investment scheme known as the Professionally Managed Accounts.

Each investor has a separate account to which their investments are allocated. You will require a different PMA for each investment entity you have e.g. individual, joint, SMSF etc.

A client will open an InvestSMART PMA and can then choose between the various InvestSMART Diversified Portfolios. An account can hold one or more models but can only hold one diversified portfolio. The management fee is charged at the account level, not per portfolio.

Once you decide which model portfolio(s) are best suited to your investment needs and objectives, we will purchase the investment to be included in your account to reflect the model portfolio or combination of model portfolios that you have selected.

What does InvestSMART invest in?

When you open an InvestSMART Professionally Managed Account (PMA), you choose from InvestSMART's range of Diversified Portfolios to invest in.

A list of the portfolios can be found here.

These managed portfolios comprise of Exchange Traded Funds (ETFs) or, in some cases direct shares. In particular, the InvestSMART Hybrid Income Portfolio invests in Australian listed hybrids and listed debt securities.

What is an Exchange Traded Fund?

An Exchange Traded Fund, or ETF, is a managed fund that trades on the stock market.

There are different types of ETFs, each with its own purpose, but most commonly, they will track or follow a particular index.

For example, if you want to follow or track the S&P ASX 200 (the top 200 Australian shares by market capitalisation), you could either buy each individual share (200 shares) or one ETF. The one ETF wraps up the 200 shares into one holding. By holding this one ETF, you get exposure to the movements of the ASX 200, less any fees.

Investing in ETFs is a form of passive investing, and they generally incur cheaper management fees, as fewer investment decisions are required to manage an ETF. They are also quite liquid and traded easily on an exchange.

You can see the holdings of each InvestSMART managed portfolio by navigating to its product page and scrolling to Key Facts > Holdings.

Do I own the shares/ETFs?

Yes, all investments held within your InvestSMART PMA are held in your name (or chosen entity e.g. SMSF) in a CHESS sponsored broking account.

You are the registered legal and beneficial owner of a portfolio of securities. You can log into the investor website at any time to view the individual securities that make up your Account.