Managed Investment Structures - A Comparison

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As a SMSF trustee, there may be times when you will have a preference to invest in some form of managed investment

. That is, someone else (preferrably a highly skilled, professional investment manager) will be making and implementing all the investment and trading decisions for that particular investment product, where you will have limited (or no) input into that process.

Now quite apart from the obvious issue of which investment manager do you choose, there is also the issue of which type of investment structure will suit you best. Consider this lets say you were looking for a managed investment solution for the Australian shares part of your SMSF investment portoflio. You have the following choices in terms of managed investment structures:

- Managed funds

- Listed Investment Companies (LICs),

- Exchange Traded Funds (ETFs)

- Separately Managed Accounts (SMAs), and

- Individually Managed Accounts (IMAs).

Which do you choose ? What are the pros and cons of each one ?

So whilst traditionally the discussion and analysis around how to best fulfil investment objectives has focused on asset allocation, investment style, manager selection etc, the structure used to deliver an investment management service is also an important consideration and deserves further examination.

The following paper, authored by Private Portoflio Managers, outlines the key characteristics of these structures, and seeks to provide an insight into the most appropriate managed investment structures that best deliver on an SMSF investors objectives. The paper aims to build a foundation for discussion of these structures; it is not intended to be an exhaustive analysis of each structure.

by: Graham Parkes

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