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Industry Super vs Super Wraps/Master Trusts vs SMSF

Discussion in 'Superannuation, SMSF & Personal Insurance' started by JIT, 21st Dec, 2007.

  1. JIT

    JIT Well-Known Member

    2nd Dec, 2006
    Hi there,

    Could someone clarify for me what super wraps/master trusts are...

    They have come as somewhat of a revelation to me see, I thought there were only two options for me with respect to super: industry super OR SMSF - but, could this be another alternative I have overlooked?!

    My money is an industry super fund. I get statements which I don't usually read once or twice a year, I vaguely remember my last account balance, and I get some life/TPD insurance cover through this fund too.

    With these super wraps or master trusts, can anyone use them?

    Who are the main wrap/master trust providers?

    Is there a minimum balance, and are the fees much higher than industry funds?

    Can you get life/TPD cover through them? Is it more expensive?

    Do they give you the option to choose individual shares or individual managed funds as part of your super portfolio??

    What about index funds or ETF's?

    At present, I have chosen a rather boring and generic 'long-term high growth' option in my industry fund, which is appropriate for me, but isn't very interesting.

    If I could pick and choose more specifically individual shares or funds and construct my own portfolio, at my own discretion, then that would make this super thing far, far more interesting...even if I lose money in the process!

    Is this possible?

    Thanks for the clarifications.

    Super Dummy
    Last edited by a moderator: 22nd Dec, 2007
  2. AsxBroker

    AsxBroker Well-Known Member

    8th Sep, 2007
    Sydney, NSW
    Hi JIT,

    You actually have potentiall FIVE options but at least four, not just two!
    Your options for super are industry funds, retail funds, corporate (depending on who you work for) smsf and public offer funds.

    Wraps and Mastertrusts are variants under RETAIL funds.

    The differences between the mastertrust works on investing percentages into your chosen managed funds, whereas a wrap has a specific cash account and all the contributions and distributions go into this account and then you have to manually buy (or sell) managed funds or shares from the cash account in dollar terms.

    This is why wraps are generally cheaper than mastertrusts.

    Generally with a wrap you'll might have a financial planner who will do the transactions for you, mastertrusts you generally do yourself by completing a form.

    BT, Asgard (St George), Zurich and Macquarie (straight off the top of my head) I'm sure there are more if you google them. Generally speaking the wrap accounts will have access to up to 400 fund managers.

    There is no minimum balance but their is a tier administration fee usually which means that the more money you have in them the cheaper it becomes, for example the Asgard platform does not charge you over $3million any admin fees, so the maximum fee is upto $3m and whether you have $5m or $10m you only get charged administration fees on $3m.

    Unless your putting in $1m they are more expensive than industry funds, albeit saying that in wraps you don't have to sell your assets (you can keep them until pension phase and sell them tax free) whereas in industry funds you are constantly paying Capital Gains Tax for other members.

    You can get considerably more life/tpd insurance in these platforms and you are individually underwritten, rather than choosing units of cover you get to choose the exact dollar amount for your particular situation.

    There is no reliable source to say whether industry funds are cheaper for insurance, a previous report (possibly from Choice) said that the costs of insurance in superannuation (between all providers) can vary substantially and the variance they quoted was up to 24 times more expensive, so DEFINITELY shop around.

    You can get insurance tables from the wraps before going into them to compare the costs.

    In wraps you get the choice of shares or super, some wraps only let you invest in the ASX300 so you might not have access to medium or smaller companies as well as income securities and warrants.

    Generally, there is a selection of index funds available. For ETFs this would depend on whether the wrap/mastertrust gives you access to invest in all securities listed on the ASX or the top 300 (ie, ASX300).

    You can choose your own funds in wrap/mastertrust, certainly the option of up to 400 different managed funds is quite considerably and more than enough. Just remember it's going to be a mixed bag, some of the managers and going to be good and some are going to be bad.



    PS We don't want you to lose money!

    This is general information, before making an investment decision speak to your FPA registered Financial Planner.
  3. JIT

    JIT Well-Known Member

    2nd Dec, 2006
    Thanks Dan, I must have been asleep when this choice of super fund and wrap thing came in, but I like it. I've done a bit more research on this myself now and have opted to use a super wrap facility and take some sort of control over my super. I always thought the only way to get control over your super investments was to use a SMSF, but wraps provide a pretty good alternative, at least until your super balance becomes large enough to make SMSF more worthwhile.