A master trust, or fund, is a platform or an administrative system which enables you to invest in a range of managed funds. Sort of like an investment ‘supermarket’.
An increasing number of advisers and super funds are using the master fund route for its ease of access and simple reporting structures. One of the benefits of this type of investment is that you receive one centralised performance report from the master fund itself, instead of a separate report from each managed fund, as is in the case when you invest directly.
Additionally, master funds are able to access managed funds at wholesale, rather than retail, rates and investors can often gain entry to managed funds that they may otherwise be denied, due to high minimum investment requirements.
On the other hand, there are often extra administration costs involved and you could find yourself paying an additional layer of entry and management fees into the master fund.
Despite the extra entry and management fees into the platform itself, once signed up, investors can sometimes switch between funds within the master funds for low or no entry or exit fees.
The difference between a master fund and a managed fund is that a master fund is a fund which invests in a range of managed funds, whereas a managed fund invests its own portfolio money directly into shares and other investments. While a managed fund may hold as many as 60 to 80 different assets, a master fund may offer 100 managed funds for you to choose from. So, even though a master fund may cost a bit more, it can deliver greater investment diversification.
Equity Trustees Superannuation and The Emerald Club are the only RIAA certified superannuation master funds available with a responsible investment option. Out of all the super funds available, they offer the widest choice of responsible investment super funds open to the public.
For more information on master funds you may like to visit the FIDO website.