Issue
What is the difference between managed accounts and managed funds?
Resolution
The information below provides an explanation of the differences between managed accounts and managed funds. The information includes:
- Types of Managed Accounts
- Separately Managed Accounts (SMA)
- Individually Managed Accounts (IMA)
- Managed Discretionary Accounts (MDA)
- Unified Managed Accounts (UMA)
Types of Managed Accounts
| Managed Accounts (SMA, IMA, MDA, UMA, etc) | Managed Funds |
| The individual investor holds beneficial ownership of the underlying equities | The individual investor owns units in the fund |
| Investors receive all dividends, franking credits, and distributions | The fund receives all payments and the fund manager has discretion over what gets distributed to investors |
| As the owner of the assets, the investor has complete transparency of their investment | An investor owns a unit in the fund and is kept in the dark about what underlying holdings the fund has or what transactions have taken place |
| The investors' individual tax position determines the tax outcome of their investment, allowing the investor the flexibility to plan their optimal tax outcome |
Separately Managed Accounts (SMA)
- SMAs are constructed on a "model portfolio" basis where each investor receives exactly the same portfolio, based on a master portfolio assembled by the fund manager
- primarily offered on Australian shares
- investment manager determines which shares are included and the weighting of each share and sets the model portfolio accordingly
- the investor will invest in the same shares but will have slightly different values depending on what price the shares were on the day they invested
Individually Managed Accounts (IMA)
- IMAs are constructed individually for each investor, although each account shares some common holdings
- e.g. If an investor wants to have greater exposure to environmentally conscious investments the IMA can be customised specifically for the investor to include greater weighting in those desired investments
Managed Discretionary Accounts (MDA)
- a combination of IMAs and SMAs however the major difference being they operate under a different licensing structure which requires the operator of an MDA to hold an Australian Financial Service Licence with MDA capabilities
- allows a portfolio to be constructed in accordance with your own personal objectives, risk tolerance, and asset preferences
Unified Managed Accounts (UMA)
- a platform where all assets are held. They provide a single overview of all the investor’s investments including SMAs, IMA’s, term deposits, cash, property, and a range of other assets classes.
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