A  Mastertrust works on the same principle as a Wrap account. One company acts as your administrator and a wide “menu” of managed funds are offered to the investor or superannuation fund member.

Some of the difference between a  mastertrust and a Wrap account is that in a mastertust generally only managed funds are offered and a cash account is not necessarily integral to the service. A mastertrust does not offer the same tax planning opportunities available in a wrap account.

What a Mastertrust can offer you is a portfolio made up of specialist managers managing the particular asset class that they specialise in. If we think of the Olympics, the Decathlon requires an athlete to excel in 10 different events. However the best decathlete will not run as fast or throw as far as the best athlete who specialises in that individual event. A superannuation trustee who creates a “multi manager” fund is using this approach on the members behalf. However the member does not know who the managers are (and may not care).

We consider that a Mastertrust is suitable for an investor who values ongoing financial advice, knows how much it costs  and is getting the advice that they pay for. The focus for the client should be the strategy and review they receive to assist in achieving their financial goals, not whether their superannuation is “the best fund”. Afterall the lowest cost fund may not offer the best performance whilst the highest cost fund may not come last in the performance stakes. You also have to consider that this years best performing fund may not be the best performing next year.

Many studies have concluded that the most significant impact on the returns an investor gets is the assets that they invest in. Who manages those assets (assuming their skill level is higher than average) enhances returns by only a small amount. A Mastertrust allows an adviser to help you determine the asset mix that is right for you, implement that portfolio and be there to counsel you during the inevitable market downturns.

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