Managed Investment Trust

Managed Investment Trust

Home  /  Blog  /  Managed Investment Trust
Posted on: 8 July 2024


Investing can be a complex endeavour, especially with the myriad of options available in today's financial landscape. One of the prominent vehicles for investment is the Managed Investment Trust (MIT). As a pooled investment structure, MITs offer investors an opportunity to diversify their portfolios, access professional management, and potentially benefit from tax efficiencies. This article delves into the intricacies of Managed Investment Trusts, exploring their benefits, types, workings, and more to provide a comprehensive guide for potential investors.

Managed Investment Trust

A Managed Investment Trust (MIT) is a type of collective investment vehicle that pools together funds from multiple investors to invest in a diversified portfolio of assets. These assets can range from equities and bonds to real estate and infrastructure projects. The primary goal of an MIT is to manage these investments collectively, with professional fund managers making decisions to achieve the best possible returns for the investors.

Benefits of Managed Investment Trusts

One of the significant benefits of MITs is diversification. By pooling funds, investors can access a broader range of assets than they could individually, spreading risk across different sectors and asset classes. This diversification reduces the impact of any single investment's poor performance on the overall portfolio.

Professional management is another key advantage. Fund managers with expertise and experience oversee the investment decisions, leveraging their knowledge to optimise returns and manage risks. This can be particularly beneficial for individual investors who may lack the time or expertise to manage their investments actively.

Tax efficiency is also a notable benefit of MITs. These trusts can provide tax advantages, such as the pass-through of income to investors, which may be taxed at a lower rate than corporate income. Additionally, MITs can distribute franking credits to investors, reducing the tax burden on dividends.

Liquidity is an essential feature of MITs. Unlike direct investments in real estate or other illiquid assets, MITs often allow investors to buy and sell units relatively easily, providing access to funds when needed.

Types of Managed Investment Trusts

There are various types of Managed Investment Trusts, each catering to different investment goals and risk profiles. Equity trusts invest primarily in stocks, offering the potential for high returns along with higher risk. Bond trusts focus on fixed-income securities, providing more stable but lower returns.

Balanced trusts invest in a mix of equities and bonds, aiming to balance risk and return. Specialty trusts may focus on specific sectors like real estate, infrastructure, or emerging markets, providing targeted exposure to particular areas of interest.

How Managed Investment Trusts Work

The structure of an MIT involves multiple layers of management and oversight. The trustees are responsible for holding and safeguarding the trust's assets, ensuring that the fund is managed in accordance with its governing documents and legal requirements. Fund managers handle the day-to-day investment decisions, guided by the trust's investment objectives and strategies.

Investors purchase units in the MIT, with each unit representing a proportional share of the trust's assets. The value of these units fluctuates based on the performance of the underlying investments. Regular reporting and disclosures keep investors informed about the trust's performance and any changes to the investment strategy.

Investing in Managed Investment Trusts

Investing in an MIT involves several steps. First, potential investors should assess their investment goals, risk tolerance, and time horizon to determine if an MIT aligns with their needs. Researching and selecting the right trust is crucial, considering factors such as the trust's performance history, management team, and fee structure.

Understanding the risks involved is essential. While MITs offer diversification and professional management, they are not without risks. Market volatility, management performance, and economic conditions can all impact returns. Therefore, it's important to conduct thorough due diligence before investing.

Tax Implications

One of the unique aspects of MITs is their tax treatment. Income generated by the trust is typically distributed to investors, who are then taxed on this income at their individual tax rates. This pass-through taxation can be more favourable than corporate taxation, where income is taxed at the corporate level before being distributed as dividends.

Investors may also receive franking credits with their distributions, which can offset their tax liabilities. Understanding the implications of capital gains tax is also crucial, as the sale of units in an MIT can trigger capital gains tax, depending on the holding period and other factors.

Legal and Regulatory Framework

Managed Investment Trusts operate within a stringent legal and regulatory framework designed to protect investors. Regulatory bodies, such as the Australian Securities and Investments Commission (ASIC) in Australia, oversee the compliance and conduct of MITs. These regulations ensure transparency, accountability, and fairness in the management of the trust.

Investors are protected by various compliance requirements, including regular financial reporting, disclosure of investment strategies, and adherence to fiduciary duties by trustees and fund managers. These measures provide confidence and security to investors, knowing that their interests are safeguarded.

Performance Metrics

Evaluating the performance of an MIT involves looking at key indicators such as historical performance, expense ratios, and risk-adjusted returns. Comparing these metrics across different trusts can help investors identify those that consistently deliver strong returns relative to their peers.

Historical performance provides insights into how well the trust has managed its investments over time. However, it's important to consider the context and economic conditions during the performance period. Expense ratios indicate the cost of managing the trust, with lower ratios generally being more favourable for investors.

Managed Investment Trust vs. Other Investments

When considering MITs, it's essential to compare them with other investment options like managed funds, exchange-traded funds (ETFs), and direct stock investments. Each has its own set of advantages and disadvantages.

Compared to managed funds, MITs often offer more tax advantages and a different fee structure. ETFs provide liquidity and lower costs but may lack the professional management and active strategies of MITs. Direct stock investments offer complete control but require significant time and expertise to manage effectively.

Case Studies

Examining successful Managed Investment Trusts can provide valuable lessons for investors. For instance, a trust that consistently delivers strong returns may do so because of a robust investment strategy, effective management, or favourable market conditions.

Learning from both successes and failures in the industry can help investors make more informed decisions. By analysing the factors that contribute to the performance of different trusts, investors can identify characteristics that align with their investment goals.

Future of Managed Investment Trusts

The landscape of Managed Investment Trusts is continuously evolving. Emerging trends and innovations, such as the integration of technology and sustainable investing practices, are shaping the future of MITs.

Market predictions suggest a growing interest in specialty trusts, particularly those focusing on environmental, social, and governance (ESG) criteria. As investors become more conscious of the impact of their investments, MITs that align with these values are likely to see increased demand.


What is a Managed Investment Trust?

A Managed Investment Trust (MIT) is a collective investment vehicle that pools funds from multiple investors to invest in a diversified portfolio of assets. It is managed by professional fund managers who make investment decisions on behalf of the investors.

What are the benefits of investing in a Managed Investment Trust?

Investing in an MIT offers several benefits, including diversification, professional management, tax efficiency, and liquidity. These trusts provide access to a broader range of assets and expertise that individual investors may not have.

How do Managed Investment Trusts differ from managed funds?

While both are pooled investment vehicles, MITs often offer more favourable tax treatment and a different fee structure compared to managed funds. MITs may also focus on specific investment strategies or asset classes.

What are the tax implications of investing in a Managed Investment Trust?

Income generated by an MIT is typically distributed to investors and taxed at their individual tax rates. Investors may also benefit from franking credits and need to consider capital gains tax when selling units in the trust.

What types of assets can a Managed Investment Trust invest in?

MITs can invest in a wide range of assets, including equities, bonds, real estate, infrastructure projects, and more. The specific assets depend on the trust's investment strategy and objectives.

How can I choose the right Managed Investment Trust for my portfolio?

Choosing the right MIT involves assessing your investment goals, risk tolerance, and time horizon. Researching the trust's performance history, management team, and fee structure can help you make an informed decision.


Managed Investment Trusts offer a compelling option for investors seeking diversification, professional management, and tax efficiencies. By pooling funds and leveraging the expertise of fund managers, MITs provide access to a wide range of assets and investment strategies. Understanding the benefits, risks, and workings of MITs is crucial for making informed investment decisions. As the investment landscape continues to evolve, Managed Investment Trusts are poised to play an increasingly important role in helping investors achieve their financial goals.

Listed ASX