WRAPs

What are WRAPs?

Over recent years, WRAPs have become increasingly important in the UK market.  They are widely used in the US and Australia. 

WRAPs are an administration platform where a range of different assets can be held including Unit Trusts, Open Ended Investment Companies, ISAs, PEPs, shares, cash, Self Invested Personal Pensions and offshore investment bonds. 

Who are they suitable for?

They are likely to be more suited to investors with larger and more varied investment portfolios.

What are the benefits?

Investments are purchased in the name of the WRAP nominee company for the benefit of the client.  The WRAP provider will negotiate discounts on the initial charge with the result that many funds will be bought at creation price or creation plus 0.25%.

Investments already owned can be re-registered to the nominee company, where this is allowed.  With one WRAP counterparty rather than dozens of product providers, there is a notable reduction of paperwork and administration.  WRAPs will often provide instant on-line access to portfolio valuations and transaction histories.  WRAPs offer the widest choices regarding investments and provide consolidated reports for Income and Capital Gains Tax returns, saving time, tracing dividend receipts, inter-statements and contract notes for sales and purchases.

What are the risks?

Again, there are no investment risks per se with the WRAP itself. As investment risk comes from that associated with the underlying investments. WRAPs can, however be run by small, poorly capitalised companies and attention must be paid to the security of client assets.