Managed investing is where you invest in a managed fund or Corporate Collective Investment Vehicle (CCIV) that buys and sells assets, such as cash, shares and bonds, on your behalf. When you invest in a managed fund, you don’t own the underlying assets; instead you buy ‘units’ in the case of a Managed Investment Scheme or’shares’ in the case of a CCIV. The value of the units or shares will rise and fall with the price of the underlying assets. Some managed funds also pay income or ‘distributions’ to investors.
The benefits of managed investing can include lower fees, diversified portfolios and the guidance of an expert. It can be a useful option for those with more complex financial situations, higher net worth individuals, and people who aren’t comfortable managing their investments themselves.
Countless investors reach a point in their lives where they realise that their wealth management needs are unmet through a self-directed approach. That’s why they decide to switch to a managed account.
A managed account is a separate entity that you can open with a financial services company. It can be a managed investment scheme or a CCIV, and it will be governed by its own rules and regulations. Managed accounts typically have a low minimum investment amount and offer the advantage of a tailored, comprehensive service.
There are several types of managed accounts, and each one offers its own advantages. For example, Individual Managed Accounts (IMA) allow you to choose a model portfolio from an investment firm. Separately Managed Accounts (SMA) are based on model portfolios but are tailored to the investor’s goals and preferences.
Diversification strategies are designed to reduce risk and volatility by spreading your investments across a range of asset classes. However, diversification does not guarantee a profit or protect against losses in declining markets.
It’s important to consider the risk level of a managed fund before making an investment. A fund’s risk level is based on the type of assets it holds and the amount of risk associated with each asset class. You can find out more about a managed fund’s risk by reading its PDS and comparing it with other funds of similar style and returns on the Morningstar website.
When you invest in a managed fund, the fees charged will reduce your returns. You can use the Fee Calculator to compare the total costs of different managed funds. It’s also a good idea to check the fees in your PDS before you make an investment.
Managed accounts give investors governance over when a money manager sells portions of the portfolio, and this may help to mitigate tax. However, it’s important to note that a managed account is not intended as a replacement for specific individualized tax, legal or investment advice. Schwab does not offer such advice. Please consult a qualified tax advisor, CPA, financial planner or investment manager for further information. Managed investing