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Managed Investment Schemes (MIS)

Managed Investment Schemes (MIS) allow investors to access assets that may be financially out of their reach, or to diversify across a broader base within an asset class. MISs are suitable for use within an SMSF, with the following provisions:

1. Your Trust Deed allows investment in MISs; and

2. The Investment Strategy allows for MIS investments.

The Investment Strategy and Trust Deed that Superannuation Warehouse supply when setting up your SMSF allow you to invest in MISs within your SMSF.

Trustees should approach MIS investments with caution. Should the investment be frozen or lost, there are no governmental provisions for recovering the investment. The Trustee carries the risk.

Preservation of capital is generally the number one objective in your SMSF.

Source – Citola Capital Partners LLP (An Overview of MISs)

By selecting investments carefully, SMSF Trustees can reduce portfolio volatility and minimise or defer tax assessment, thereby improving the asset value/performance of the fund.

Although the rate of taxation on superannuation funds is relatively low, it still has a negative impact on growth within a fund with assessment on:

  • Contributions
  • Earnings
  • Capital Gains

Investments that have been granted an ATO product ruling, such as a tax effective MIS, can provide an SMSF with benefits through taxation planning and portfolio diversification.

A Forestry MIS can have numerous structures and elements that can affect the outcome of the scheme.

Of the projects that have been offered to investors over several decades, some of the more recent have had problems attributable to structural elements. Nevertheless, many reputable projects have also been offered.

A sound structure ensures that:

  • Ongoing maintenance costs are available annually;
  • Solvency of the Responsible Entity is not dependent on future project sales;
  • Annual holding costs of project land are met within commercial arrangements, securing land tenure.

An example of an MIS project displaying these characteristics is the Premium African Mahogany 2012 Project.

Always read the project’s Product Disclosure Statement (PDS) thoroughly and consult your accountant or financial professional about the suitability of any MIS project with regard to your current financial situation and goals. Most of these investments will have research reports that are available on request, and will clearly layout the pros and cons of the investment. We strongly recommend that you take the time to study any research material that is available to you.

Managed Investment Assistance

There are companies that specialize in assisting SMSFs in investing within MISs. One such company is Nucleus Wealth. They focus on their clients investment needs (ethical, risk and income) and wish to diversify their investment portfolio. Their clients are able to customize their investment portfolio in regards to their unique circumstances. Please click on Nucleus Wealth’s Logo to access their website.

Here is Nucleus Wealth’s Product Disclosure Statement.

Here is Nucleus Wealth’s Ethical/Portfolio Screens for July 2019.

Conclusion

MISs are a great way for SMSF Trustees who wish to divserify their Risk against a large asset base. Trustees should ensure that they understand the risks involved in each investment. To see more about other allowable Investments that Trustees can make please click the button below.

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