Frequently Asked Questions
How many portfolios does Collins House Online offer?
Collins House Online believes every investor is unique, so it builds a customised portfolio for each investor. When you join, Collins House Online will ask you a series of questions, which the company uses to construct your personal portfolio based on your risk tolerance, financial goals and investment timeline.
Collins House offers 5 individually tailored investment portfolios.
- Conservative. 20% growth, 80% defensive
- Moderate. 40% growth, 60% defensive
- Balanced. 60% growth, 40% defensive
- Growth. 75% growth, 25% defensive
- Aggressive. 90% growth, 10% defensive
What asset classes can I invest in?
Your portfolio is constructed from a list of Exchange Traded funds that provide exposure to different asset classes so you have a diversified portfolio.
- Australian Shares: Collins House Online offers access to nearly 200 Australian listed companies.
- International Shares: Collins House Online can access shares in over 1,500 of the world’s largest companies listed across the U.S, Europe and Japan.
- Emerging Markets: Collins House Online can access over 3,500 of the largest companies in emerging economies such as Brazil, China and India.
- Property: Collins House Online provides access to Australian property such as shopping centers, office buildings and residential.
- Enhanced Cash: Collins House Online can give you a mix of bank deposits, term deposits and short term money market securities.
- Bonds: Collins House Online has access to bonds issued by high-quality companies and the Australian government.
What if my portfolio goes down in value?
When we built and recommended your portfolio, we knew there would be bad days. Your portfolio has been built to withstand changing market conditions.
A few things to keep in mind:
- Volatility is a normal part of investing in the sharemarket and also applies to Government Bonds and also Fixed Interest Investments
- Sharemarkets have historically delivered higher long-term returns than cash because their short-term returns are so unpredictable.
- Over the past century, there have been some large dips, but the market has always recovered and risen to new highs.
- In order to make money from your investments, you need to hold through times of increased volatility.
When you invest, you are compensated for bearing risk. If share returns were predictable they wouldn’t be risky and if they weren’t risky there would be no reason why they should generate a higher long-term rate of return than safer investments like cash.
Remember, if you’re invested with Collins House Online, the sharemarket is only one component of your portfolio. Your shares are also spread across not only the US and Australia, but also many sharemarkets throughout the world.
Depending on your portfolio, you may also have exposure to Australian bonds, property and cash. These other components help to create the benefit of diversification, an investment approach that is at the core of all-intelligent investing.
You cannot control what markets will do from day to day, but you can control your actions and exhibit discipline in sticking to your investment strategy.
As Warren Buffett says, “We don’t have to be smarter than the rest. We have to be more disciplined than the rest”.
How often does my portfolio get rebalanced?
We compare the asset allocation of your portfolio against your target asset allocation on a daily basis but rebalance only when required. By running the comparison daily we can incorporate cashflows, such as contributions and investment distributions, into the rebalancing decision.
We’ve set thresholds so if your asset allocation moves far enough from the target allocation we will rebalance for you, even in the absence of any contributions or investment distributions. The thresholds are different for each portfolio and asset class depending upon characteristics such as total portfolio risk and asset class volatility.
Broadly speaking, the rebalancing thresholds are set so that the portfolios do not materially deviate from their expected long term risk/return profile and yet shouldn’t be so restrictive so as to generate excessive rebalancing. Too frequent rebalancing risks generating poorer tax outcomes and excessive transaction costs. Additionally, the thresholds are set wide enough so that they can take advantage of the expected momentum exhibited by asset returns over the short term but not too wide to deviate materially from the expected long term risk/return profile.
In the absence of contributions, we expect that the rebalancing transactions will occur once or twice over a 12 – 18 month period.
Will I receive franking credits from my investments?
Yes. If you hold an Australian ETF in your Collins House Online portfolio and the companies within that ETF pay franked dividends, you will be entitled to those dividends and any franking credits attached to them.
Will I receive dividends from my investments?
Yes. Dividends (also called distributions) are paid directly into your Cash Management Account (CMA) and are automatically reinvested once your CMA reaches the minimum investment balance of $5000. Dividends will appear in your activity feed.
How is my Collins House Online portfolio constructed?
Your Collins House Online portfolio is constructed from a list of Exchange-Traded Funds (ETFs) approved by the Collins House Online Investment Committee which includes Dominic Alafaci. Collins House Online portfolios are comprised of several ETFs that provide exposure to different asset class, which results in an overall diversified portfolio.
The specific combination of ETFs in your portfolio is dependent on your own financial situation and capacity for risk.
What is an Exchange Traded Fund?
An Exchange Traded Fund (ETF) is a type of investment fund listed on the stock exchange and traded like shares. Each ETF holds a collection of securities, the composition of which mirrors a particular index, such as the S&P/ASX 200 index of Australian shares.
ETFs allow individual investors to gain all the diversification benefits of owning a large number of securities while only having to hold one investment. In so doing, ETFs significantly lower the investment amount needed to diversify appropriately. Since each ETF is designed to track a particular index, ETF fees also tend to be lower than for equivalent funds trying to beat indices.
Whose name are my investments held under?
All ETFs that are purchased as part of your Collins House Online portfolio are held in your name under your own personal Holder Identification Number.
Why does my account have a cash balance?
When you invest with Collins House Online we will open a Macquarie Cash Management Account (CMA) on your behalf. Money deposited by you, into this account, is used by Collins House Online to purchase ETFs on your behalf. In addition to ensuring that your CMA contains sufficient funds to pay for all ETF purchases, we maintain a sufficient balance in your CMA to ensure the successful payment of fees and charges.
What is rebalancing?
The recommended weightings of assets in a new investment portfolio is termed the Strategic Asset Allocation. Initially, the composition of the portfolio will reflect the Strategic Asset Allocation, however with time the weighting of assets in the portfolio will change either as some assets outperform others, or because of the impact of additional cash contributions into the portfolio.
Rebalancing is the process by which a portfolio that has materially changed from the original asset allocation is re-adjusted toward the Strategic Asset Allocation.
How do you determine my risk score?
Your risk score is determined by an algorithm based on your responses to the risk questionnaire that you complete when opening your Collins House Online account. The algorithm generates a score ranging between 1 and 10.
A Collins House Online risk score of 1 is suggestive of a person who is highly investment risk averse while a score of 10 is indicative of a person who has a high tolerance to investment risk. We use your Collins House Online risk score as one of the factors (though not the only factor) in determining what Collins House Online portfolio to recommended to you.
Who makes my investment decisions?
Collins House Online portfolios are approved and maintained by the Collins House Online Investment Committee in conjunction with the Clover Investment Committee
Dominic Alafaci who has over 30 years’ experience in tailoring investment portfolios to match client’s aims and risk profile, heads the Collins House Online Investment Committee. Alongside him is the General Manager of Collins House Online David Varlamos and Director of Collins House Private Wealth Kate Nicol. Between them, they have over 60 years experience in portfolio construction and financial markets.
Kate Nicol A Dip FP
Director Collins House Pty Ltd
Senior Advisor Collins House Private Wealth
Kate has over 15 years experience in financial services. She holds an Advanced Diploma of Financial Planning, and is currently completing her Bachelor of Business in Financial Planning as well as the Certified Financial Planner certification through the FPA.
Before joining Collins House in 2011 she commenced her career in financial services in 2001 in the United Kingdom before returning to Australia to join the Commonwealth Bank in Melbourne.
Between 2004 and 2010 she was employed as an Indepenedent Financial Advisor with UK Chartered
Firm, Firth & Scott Financial Services Ltd where she was responsible for over 100 retiree client portfolios. Kate provides high quality ongoing advisory services to clients of Collins House, and assists them achieve their lifestyle and financial objectives in a professional, yet personalized and ethical manner.
David Varlamos B.A., SIA (AFF)
Collins House Online Investment Services Pty Ltd
David joined Collins House in 2018 as a Portfolio Advisor. He has extensive experience in constructing and managing High Net Worth Portfolios comprised of listed equities, derivatives and managed funds as well as providing corporate advice on Initial Public Offerings and capital raisings.
David’s previous positions included as a Director at Baillieu Holst from 1995 to 2010 and as a Senior Investment Advisor at Macquarie Bank from 2010 to 2014.
David holds a Bachelor of Arts from Monash University and a Certificate in Financial Markets from the Securities Institute of Australia.
Can I customise my portfolio?
No. Collins House provides personal financial advice, and in doing so we may recommend an Investment Program (incorporating a recommended investment portfolio) where we believe that it is appropriate to your financial needs and objectives.
Collins House Online does not offer the capability for customisation of the portfolio, however for significant sums ($10 Million or more), we will consider creating standalone portfolios.
Does Collins House Online accept in-specie transfers?
At this stage, Collins House Online is unable to offer a facility to accept ETFs that you already hold and would like to form part of your Collins House Online investment portfolio, via an ‘in-specie’ transfer.
Are Collins House Online portfolios available via WRAP or SMA platforms?
Collins House Online portfolios can only be accessed via the Collins House Online website and are not available via WRAP and SMA platforms at this stage.
Collins House Online Investment Services Pty Ltd (Collins House Online) is a Corporate Authorised Representative of Collins House Private Wealth Pty Ltd AFSL 449146.