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Should You Invest in a Managed Investment Trust?

Published 12/09/2024 | Last Updated 12/09/2024

Written by:
Joel Simmonds
Head of Advice  

We all want to make smart financial decisions, but sometimes the world of investments can feel overwhelming.

If you’re looking for a way to grow your wealth, you might be considering investing in a Managed Investment Trust (MIT). But is it the right option for you?

In this article, we’ll break down what an MIT is, how it works, and weigh up the pros and cons so you can make an informed decision.

 

Table of Contents

What is a Managed Investment Trust?

A Managed Investment Trust (MIT) is a structure that allows you to pool your money with other investors to invest in a range of assets, such as property, shares, and bonds.

It’s common in Australia because of the tax advantages, especially for foreign investors, under the attribution managed investment trust (AMIT) framework.

Unlike directly investing in individual assets, an MIT is professionally managed by an investment management manager. Their role is to make the decisions about where and how to invest, based on the goals of the trust and its investors.

Here’s a quick snapshot of how an MIT works:

  • You buy units in the trust, which represents your share of the pooled investments.
  • The income generated by the trust’s assets is distributed to investors based on the number of units they hold.
  • MITs are governed by an investment management agreement, which outlines how the fund operates, including the risks, fees, and expected returns.

A good place to start is using a net worth calculator or budget planner, which can help you identify how much you can comfortably invest without impacting your day-to-day life. 

Why Use a Managed Investment Trust?

If you’re thinking about investing in a managed investment trust Australia, there are a few advantages to consider:

  • Professional Management: A chartered investment manager makes the investment decisions for you, which can be handy if you don’t have the time or expertise to manage investments yourself.
  • Diversification: By pooling your money with other investors, MITs give you access to a wide variety of asset classes, such as shares, property, and bonds.
  • Tax Benefits: The attribution managed investment trust regime allows for some tax advantages, particularly for foreign investors.
  • Accessibility: You can invest in assets that may have been out of reach on your own, including alternative investments, property, or real estate investment planning.

Things to Consider Before Investing

On the flip side, here are some things to keep in mind when considering an MIT:

  • Fees: Managed investment funds typically come with management fees that can eat into your returns over time.
  • Limited Control: You’re not the one making decisions. If you prefer hands-on investing, this could be a drawback.
  • Risk: Like all investments, MITs come with risks. Market volatility, economic conditions, and even political changes can impact returns.
  • Tax Complexity: While there are tax benefits, some investors find the tax rules around MITs to be a bit complex, particularly when dealing with foreign investments.

What are the Alternatives?

If you’re unsure whether an MIT is the right fit for your financial situation, you may want to consider other options, such as:

  • Managed Investment Funds Australia: Similar to MITs, these offer a range of professionally managed funds but may differ in their tax treatment.
  • Mutual Funds: Pooled investments where a fund manager selects a portfolio of assets for you, typically seen in investment and retirement planning.
  • Self-managed Super Funds (SMSFs): If you prefer more control over your retirement investments, an SMSF could be worth exploring.
  • Real Estate Investment Plan: For those looking to diversify into property without direct ownership, there are real estate investment planning options that can offer long-term growth.

Unsure About Your Investment Plan?

If you’re new to the idea of MITs or feel unsure about the risks and benefits, we recommend that you get professional advice before making any investments. 

An investment management manager or financial adviser can help you weigh up your options, assess your risk tolerance, and choose a strategy that fits your financial goals. Professional guidance can be especially useful when dealing with applied investment management, where specialised knowledge is key to getting the best results.

An experienced financial advisor can help you:

  • Assess your current financial situation and determine the right amount to invest.
  • Develop an investment plan tailored to your financial goals and risk tolerance.
  • Choose the right investment options, including more complex strategies like choosing which managed investment trusts are the best options. 
  • Monitor and adjust your investment plan over time as your financial circumstances change.

At the end of the day, investing in managed funds or MITs isn’t a one-size-fits-all solution. The best choice depends on your personal financial goals, risk appetite, and long-term investment strategy.

If you’re unsure about any part of your investment journey, or if you simply want expert guidance to help optimise your strategy, professional advice can make all the difference.

Click here to learn more about our Investment Advice services.

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Discover how we align your investments with your financial goals, ensuring a balanced approach that enables growth while carefully managing risk.

FAQs About Managed Investment Trusts

Here’s some of the most commonly asked questions about managed investment trusts and choosing them as an investment option.  

If your questions isn’t answered below, then please feel free to get in touch. We’re always happy to help.

1. What is the difference between a Managed Investment Trust (MIT) and a Managed Investment Scheme (MIS)?

A Managed Investment Scheme is a broader term that refers to any arrangement where multiple people pool their money to invest in assets.

An MIT is a specific type of MIS that offers certain tax advantages.

2. Can a Managed Investment Trust help me with my retirement plan?

Yes, MITs are often used as part of a retirement investment planning strategy. They offer the benefit of professional management and can be tailored to suit long-term goals.

3. Are Managed Investment Trusts suitable for short-term investments?

MITs are generally better for long-term investments due to the time it takes for assets to appreciate and generate returns.

Short-term investments might not benefit as much from the structure of an MIT.

4. What are the tax advantages of a Managed Investment Trust?

MITs offer tax efficiency, particularly for foreign investors.

The attribution managed investment trust (AMIT) regime allows for tax flexibility, making it a popular choice in Australia.

5. How do I know if a Managed Investment Trust is right for me?

If you’re looking for professional management and diversification, an MIT could be a good fit.

However, it’s essential to weigh the fees, risks, and tax implications.

Consulting a professional can help you decide if it suits your financial and investment planning needs.

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December 5, 2024

This is a publication of Direct Wealth Pty Ltd, a wholly owned subsidiary of Direct Wealth Group Pty Ltd.

General Advice Warning – The information contained in this article is of a general nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decisions regarding any products or strategies mentioned in this publication.

Disclaimer – While all care has been taken in the preparation of this blog, to the maximum extent permitted by law, no warranty is given in respect of the information provided and accordingly, neither Direct Wealth nor its related bodies corporate, employees or agents shall be liable for any loss suffered arising from reliance on this information.

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