What’s the difference between a managed fund and a model portfolio?
If you're exploring investment options, chances are you've come across both managed funds and model portfolios—two popular vehicles designed to help you grow your wealth. While they might seem similar on the surface, there are important differences in how they work, how much control you have, and what level of involvement is required.
At McMillans, we help clients understand the pros and cons of both approaches so they can choose an investment strategy that aligns with their goals, preferences, and risk tolerance.
What is a managed fund?
A managed fund is an investment vehicle where your money is pooled with other investors' funds and managed by a professional fund manager. That manager decides where the money is invested—typically across a mix of asset classes like shares, property, fixed interest, and cash—according to the fund's objectives.
You don’t own the individual assets in the fund, but instead, you own units in the fund. The value of your investment rises and falls with the unit price, which reflects the performance of the underlying assets.
What is a model portfolio?
A model portfolio is a collection of recommended investments (usually direct shares or ETFs) based on a particular strategy. These portfolios are developed and monitored by financial professionals and are designed to suit different investor profiles, such as conservative, balanced, or growth-oriented.
The key difference? You own the underlying investments directly. This means more visibility and control, as well as potential tax advantages—especially when it comes to managing capital gains.
Key differences between managed funds and model portfolios
When to choose a managed fund
A managed fund may be right for you if:
You prefer a passive, hands-off approach
You want to invest small amounts regularly
You’re looking for a diversified portfolio without needing to make ongoing decisions
You're new to investing and want professional management without the complexity
When to choose a model portfolio
A model portfolio might suit you better if:
You want to own assets directly
You’re seeking more control and tax efficiency
You're comfortable reviewing and approving investment changes
You prefer transparency and customisation in your portfolio
Can you have both?
Absolutely. Many investors choose to diversify their investments by holding both managed funds and model portfolios. This allows them to blend different levels of risk, control, and liquidity depending on their overall goals.
How McMillans can help
We guide clients through both options—helping you:
Understand the risks and returns associated with each structure
Choose a mix of investments aligned to your financial objectives
Manage taxation and reporting requirements
Monitor and adjust your strategy as your circumstances evolve
Whether you're after simplicity or customisation, we’ll help you make informed choices.