Investment Solutions

What is a wrap account?

If you don't understand what wrap accounts are, take heart. There are lots of other investors out there who are in the dark about wrap programs, which are often called “all-in-one accounts” or the “one-stop solution.”

To take the mystery out of wrap accounts, let’s start by looking at what regular mutual fund investing entails. Typically, your financial advisor will start by looking at your investment objectives, goals, and risk tolerance. He or she will then assemble a portfolio of funds that meet your profile. Generally you will need more than one fund to provide adequate diversification.

This “free-to-roam” approach provides maximum choice, but it does have limitations:

• Paperwork – since every purchase or exchange represents a transaction, you may receive more transaction confirmations and statements from various fund companies
• Confusion – sometimes it’s hard to get a clear picture of how your overall portfolio is performing when you have multiple accounts or receive several statements from different companies
• Requires more attention – as different funds grow at different times, you and your advisor occasionally have to move money from one fund to another to keep your asset weights at levels determined by your investment objectives

Enter the wrap account

Wrap accounts were developed to solve these problems. For a single fee, you get all your investments consolidated in one place. So instead of receiving numerous individual statements from different fund companies, you can see the asset allocation and performance of your portfolio at a glance, giving you a big-picture view.

But a wrap account is about more than simplifying fees and consolidating investments in one place. Your wrap account also takes care of rebalancing automatically.

How does rebalancing work?

After your financial advisor works with you to outline your financial goals, objectives and risk tolerance, your investment portfolio can be set up to provide you with diversification across a variety of asset classes, geographic regions and investment styles. To make sure your account stays true to your investing profile, wrap accounts rebalance automatically at set intervals.

Automatic rebalancing takes the emotion out of investing – a key feature in good markets and bad. That’s one of the reasons why wrap accounts are one of the fastest-growing investment vehicles today.

To learn more about Mackenzie's wrap programs, see Symmetry. Symmetry requires a minimum investment of $25,000.

For novice investors or for investors in group savings plans, see Keystone Portfolio Funds which require a minimum investment of $500.

To learn more about fees and mutual fund investing, check out Mackenzie's guide, Fees and Mutual Fund Investing: The Facts