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APRA confirms performance test status of SMAs

Mike Taylor11 June 2024
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The Australian Prudential Regulation Authority (APRA) has removed any lingering doubt about separately managed accounts (SMAs) in the context of the superannuation fund performance test being applied to ‘choice’ type products.

In an update of guidance around the performance test, APRA has noted the status of SMAs as Trustee Directed Products (TDPs) and said SMAs and other managed accounts can be TDPs depending on how the product features operate and interact with the requirements of the regulations.

As well, the APRA has already made clear that superannuation investment options held through platform structures will be treated as trustee directed products and therefore subject to the performance test.

On the question of managed accounts, APRA said that, in practice, their inclusion would be determined by the ability of the beneficiary to alter the strategic asset allocation of a particular covered asset class.

It said if “a beneficiary of the fund cannot require the trustee of the fund to alter an amount attributable to the beneficiary to be invested in a particular covered asset class in an investment option then that product satisfies the TDP definition”.

“Conversely if a beneficiary can require the trustee of the fund to alter the covered class amount of the investment option then it cannot be a TDP,” it said.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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