If you want to invest in a managed fund, then you might not be sure whether to go with an individually managed account (IMA) or a separately managed account (SMA). While IMAs suit some investors, SMAs also have their advantages. What are the advantages of SMAs?
1. Lower Starter Investment Sums
Every IMA and SMA has a starting investment level. This is the minimum amount of money you need available before you can invest in an account. SMAs typically have much lower investment starting limits than IMAs. So, if you don't have a large sum to invest, this option will suit you better.
2. Easy Access to Professional Fund Management
You don't have to be a financial expert to invest successfully. However, if you have an exact idea of where you want your money to go, then an IMA is a viable choice. Here, you work with your account manager to set up the best investment plan for you. For example, you might direct your manager to invest in certain sectors, types of assets or specific companies.
However, if you don't have the time, knowledge or desire to be really involved in your investment planning, then an SMA is a good way to go. Here, the company that manages your fund makes investment decisions on behalf of everyone who invests in the fund. Sometimes, you can make certain investment choices along the way; however, the bulk of the decision-making and planning processes lie with the fund manager. You don't have to worry about where to invest and how to manage your money.
So, you get expert help through the whole process. You also get direct share ownership here. While the fund is managed on behalf of a range of investors, each one's shares are treated individually. You can also usually access your account online so that you can check your portfolio at any time.
3. Lower Costs
Both IMAs and SMAs have management charges. These charges are higher if you take out an IMA. IMAs cost more to run because the funds are more specifically targeted to your personal investment needs. Your fund manager invests on a much more customised basis.
An SMA has more of a pooled format. Your manager makes investment decisions for everyone in the fund based on their own judgement. This approach is cheaper to run, so your fees and charges should be lower.
To find out more, contact asset management companies that offer separately managed accounts.Share