Understanding Simple Managed Investment Schemes: What You Need To Know

A simple managed investment scheme (MIS) is a type of unit trust where investors pool their money together to be managed by a fund manager. This allows investors to access a wider range of investment opportunities than they would be able to alone. Investors are assigned units proportionate to the amount of money they have invested, and the fund manager buys and sells assets such as cash, shares, bonds, and property on their behalf. The value of these units rises and falls with the value of the underlying assets. MISs cover a wide variety of arrangements and underlying assets, including cash management trusts, equity schemes, agricultural schemes, and time-sharing schemes.

A managed fund is a 'registered managed investment scheme'

A managed fund is a registered managed investment scheme (MIS), also known as a pooled investment. In a managed fund, investors' money is pooled together and used by the investment manager to buy and manage investments on behalf of all investors in the fund. This allows investors to access opportunities that may not be available to them if they were investing alone.

A managed fund is a type of unit trust, where investors are assigned units proportionate to the amount of money they have invested. The fund is open-ended, meaning that new units are created as investors join, and cancelled as investors leave.

There are three key roles performed by different entities in a managed fund: a Responsible Entity, an Investment Manager, and a Custodian. The Responsible Entity is responsible for overseeing the operations of the fund, monitoring its investments and market performance, and ensuring the fund pays its operating costs and tax. The Investment Manager selects and manages the fund's assets, while the Custodian, an independent financial institution, physically holds the fund's underlying investments, helping to insulate the fund from fraud.

Managed funds cover a wide variety of arrangements and underlying assets. Some of the most popular schemes include trusts (property, cash management, or equity), agricultural schemes, and cash management trusts.

An MIS can be registered or unregistered, but all must be operated by a manager with an Australian Financial Services Licence (AFS Licence) authorising them to run the scheme. An MIS must register with the Australian Securities and Investments Commission (ASIC) if it is promoted by a person in the business of promoting MIS, or if ASIC requires it to.

Investors' money is pooled together and used to buy investments

A managed investment scheme (MIS) is a type of investment where investors' money is pooled together and used to buy a variety of investments. This allows investors to access opportunities that may not be available to them if acting alone.

In a managed investment scheme, multiple investors contribute money to gain an interest in the scheme. The money is then pooled together, often from many hundreds or thousands of investors, and is used to invest in a common enterprise. The scheme is operated by a 'responsible entity' or a fund manager, who oversees the operations of the fund, monitors the fund's investments and market performance, and ensures the fund pays its operating costs and tax.

The fund manager will buy and sell assets such as cash, shares, bonds, and listed property trusts on behalf of the investors. Investors do not own the underlying investments but instead own 'units' in the fund or ''shares' in a Corporate Collective Investment Vehicle (CCIV). The value of these units or shares will fluctuate with the value of the underlying assets.

Pooling funds in a managed investment scheme allows investors to access a professionally managed portfolio of both local and global stocks. It also provides access to a broader range of assets and markets that may not be accessible to individual investors.

A fund manager operates the scheme

A fund manager, also known as a 'responsible entity', operates the scheme. They are responsible for overseeing the operations of the fund, monitoring the fund's investments and market performance, and ensuring the fund pays its operating costs and tax.

The fund manager may also act as the fund's investment manager, or they may appoint a third-party investment manager. The investment manager is responsible for selecting and managing the assets of the fund.

The fund manager does not have full autonomy, however. They are regulated by the Corporations Act and the Australian Securities and Investments Commission Act 2001 (ASIC Act). These Acts set out the conduct and disclosure obligations of financial service providers, including the operators of managed investment schemes.

ASIC's role in regulating managed investment schemes includes undertaking proactive and reactive supervision and surveillance activities into operators' conduct and disclosure obligations, taking enforcement action in response to non-compliance, assessing AFS licence applications, and providing guidance to industry and policy advice to the Australian Government.

Fund managers are also responsible for creating and cancelling units as investors join or leave the fund.

Investors do not have day-to-day control over the scheme

A managed investment scheme (MIS) is a type of investment where multiple investors contribute money to a pooled fund, which is then used to buy and sell assets. This allows investors to access investment opportunities that may not be available to them if acting alone. The fund is managed by a fund manager, or a 'responsible entity', who oversees the operation of the scheme and makes investment decisions.

The fund manager may also act as the investment manager, or a third party may be appointed to this role. The investment manager is responsible for selecting and managing the fund's assets, which can include cash, shares, bonds, and listed property trusts.

Investors in a managed investment scheme are assigned 'units' or 'shares' proportionate to the amount of money they have invested. The value of these units or shares will rise and fall with the value of the underlying assets. While investors do not own the underlying investments, they benefit from the fund's performance through the increase in value of their units or shares.

Managed investment schemes cover a wide range of arrangements and underlying assets. Some common examples include cash management trusts, equity schemes, exchange-traded funds (ETFs), agricultural schemes, and time-sharing schemes.

It is important to note that managed investment schemes typically have higher fees than other investment types and may not allow for easy conversion of investments into cash. Investors should carefully consider the advantages and disadvantages of MIS before deciding to invest.

Managed investment schemes cover a wide variety of arrangements and underlying assets

Managed investment schemes, also known as 'schemes' or 'pooled investments', cover a wide variety of arrangements and underlying assets. The schemes enable multiple investors to contribute money, which is then pooled together and used to invest to produce a profit. The pooled funds are managed by a fund manager, who buys and sells assets such as cash, shares, bonds, and listed property trusts on behalf of the investors.

The variety of managed investment schemes include cash management trusts, Australian equity (share) schemes, international equity schemes, exchange-traded funds (ETFs), and agricultural schemes (e.g. horticulture, aquaculture, and viticulture). Some other less common types of managed investment schemes are horse-breeding and horse racing schemes, time-sharing schemes, and serviced strata schemes.

The underlying assets of these schemes can vary widely, and as a result, investors can access a broad range of assets and markets. The most popular schemes include trusts (property, cash management, or equity), and agricultural schemes.

It is important to note that managed investment schemes are generally only recognised as such when they are 'collective'. Some examples of investments that are not considered managed investment schemes include direct purchases of shares or other equities, debentures issued by a body corporate, and schemes operated by an Australian bank in the ordinary course of its business (e.g. term deposits).

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