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About IMAs & SMAs
Investment Management Accounts (IMAs) and Separately Managed Accounts (SMAs) are two investment vehicles that offer customised portfolio management services to investors.
Both are designed to provide professional asset management while allowing for personalized investment strategies, catering to individual risk tolerances and financial goals.
What are IMAs & SMAs?
Investment Management Accounts (IMAs) are professional investment accounts managed by financial institutions.
They provide clients with a diversified investment strategy tailored to their financial objectives.
IMAs typically pool funds from several investors but are often customised to reflect individual preferences.
Separately Managed Accounts (SMAs) are investment accounts where a professional portfolio manager invests directly on behalf of the account holder.
Each account holds individual securities, providing greater transparency, flexibility, and control over investments compared to pooled vehicles.
Types of IMAs & SMAs
Types of IMAs include:
- Equity IMAs: Focused on equity securities.
- Fixed-Income IMAs: Invest primarily in bonds and debt securities.
- Balanced IMAs: Diversified across asset classes, including equities and fixed income.
Types of SMAs include:
- Equity SMAs: Tailored equity portfolios.
- Fixed-Income SMAs: Focused on bond markets.
- Alternative Investments SMAs: May include private equity, hedge funds, or real estate investments.
Related Articles
View all articlesFeatures and Risks of IMAs & SMAs
Features of IMAs & SMAs
There are three main features of IMAs and SMAs:
- Customisation: Both IMAs and SMAs offer personalised investment strategies.
- Professional Management: Both IMAs and SMAs are managed by investment professionals with the relevant expertise.
- Transparency: SMAs provide real-time access to individual holdings.
Risks of IMAs & SMAs
There are three main risks of investing in IMAs and SMAs:
- Market Risk: Both IMAs and SMAs are vulnerable to market fluctuations which can affect investment performance.
- Manager Risk: Both are dependent on the skill and strategy of the management team.
- Liquidity Risk: Certain IMA and SMA investments may be less liquid, affecting the ability to sell assets quickly.
How to Compare IMAs & SMAs
When comparing IMAs and SMAs, investors should consider:
- Investment Strategy: Whether the strategy aligns with investors’ goals.
- Fees and Expenses: Management fees, performance fees, and other costs.
- Performance History: Track record of returns relative to benchmarks and competitors.
- Minimum Investment Requirements: SMAs typically require higher minimum investments than IMAs.
- Tax Efficiency: Assess the tax implications of both structures.
Ways to Invest in IMAs & SMAs
Investors can access IMAs and SMAs through:
- Financial Advisors: By consulting with financial advisors to select and manage both types of account.
- Brokerage Firms: Many brokerages offer both IMAs and SMAs.
- Wealth Management Firms: Specialised firms that focus on high-net-worth individuals.
- Self-Managed Superannuation Funds (SMSFs): Investors may include IMAs and SMAs as part of their self-managed retirement strategy.
Investing in IMAs & SMAs FAQs
IMAs typically have lower minimums, while SMAs often require $100,000 or more.
Yes. Both are subject to regulations, but differ in how they are managed.
In both cases, fees can be flat, tiered, or performance-based, depending on the manager.
Yes. Both offer high levels of customisation, especially SMAs.
SMAs provide tax benefits through their direct ownership of securities, enabling better tax-loss harvesting.
SMAs offer more transparency than IMAs since investors own the individual securities directly.
IMAs typically allow easier access to investors’ cash, whereas SMAs may have restrictions on withdrawals.
While not mandatory, consulting a financial advisor is advisable for tailored investment strategies like IMAs and SMAs.
Investing in IMAs & SMAs Conclusion
IMAs and SMAs offer unique advantages since they are both personalised investment strategies with professional management.
Understanding their differences, types, features, associated risks, and methods of comparison can help investors make informed decisions.
These vehicles provide varying degrees of customisation, transparency, and management costs, making it essential for investors to align their choice with their individual investment goals and needs.
