Managed investment portfolio: professional management in your personal account
A managed investment portfolio is built and managed for you by a professional portfolio manager, while the money remains registered in your name at a bank or investment house. It combines professional expertise with your direct ownership of the securities.
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How does it work in practice?
The process begins by defining an investment policy (מדיניות השקעה):
- Needs assessment: In a meeting with the portfolio manager, you define your risk level, investment horizon and personal preferences.
- Opening an account: You open a dedicated investment account and deposit money into it.
- Ongoing management: The portfolio manager buys and sells securitiesA general term for a tradable financial asset (such as a share, bond, or unit in a fund) that represents a right to an asset or to profits. in the capital market according to the agreed policy, without needing your approval for each individual transaction.
- Entry threshold: Unlike automated investment products, a minimum investment of hundreds of thousands of shekels is generally required. However, digital solutions also exist that allow you to begin with smaller amounts.
What is inside the portfolio?
The portfolio can contain a wide range of assets: Israeli and foreign shares, bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest., exchange-traded fundsA security traded on an exchange that tracks a particular index, allowing an investor to buy a "basket" of assets in a single transaction., mutual fundsAn investment vehicle that allows many investors to pool their money into a shared portfolio of assets managed by a professional., cash and other assets.
Its composition changes over time according to market conditions and the portfolio manager's professional judgment.
Transparency and control: everything is in your name
This is one of the most important advantages of a managed investment portfolio:
- Direct ownership: The money remains fully yours and is managed in an account registered in your name.
- Maximum transparency: At any time, you can see which securities the portfolio holds and what they are worth.
- Flexibility: You can update the investment policy or end the management arrangement at any stage.
Taxation: ongoing tax events
A managed investment portfolio has no tax-deferral mechanism:
- A tax eventAn action in an investment portfolio (such as selling at a profit) that triggers an immediate tax payment to the state. on every sale: When the portfolio manager sells a security at a profit, capital-gains tax of 25% of the real gainThe actual gain remaining from an investment after deducting the rate of inflation. is paid.
- Automatic withholding: The bank or Beit Hashkaot (בית השקעות), or investment house, generally withholds the tax at source.
- Withdrawing money: Withdrawing cash from the portfolio does not create a new tax event because the tax was already paid when the securities were sold.
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Highly personalized: The portfolio is built according to your precise needs and goals. | No tax deferralThe ability to pay capital gains tax only when money is withdrawn from the plan, rather than when the gain is generated.: Every profitable sale of a security triggers immediate tax. |
| Full transparency: You always know where the money is invested. | Additional costs: Management fees, trading commissions and custody fees may accumulate. |
| Legal control: The money remains in an account registered in your name. | Dependence on the manager: The quality of management depends on the portfolio manager's judgment. |
| Flexibility: You can change the investment policy, add or withdraw money and end the management arrangement at any time. | Less automated: The product requires more involvement, decisions and monitoring than other investment products. |
The bottom line
- What is it?
- Professional, personal and transparent management tailored to your needs.
- What is it not?
- A product with tax deferral or built-in tax benefits.
- Who may find it suitable?
- Someone seeking extensive personalization and control who is prepared to deal with ongoing taxation.
- Main advantage
- Control and transparency.
- Main disadvantage
- Ongoing tax events and additional costs.
Frequently asked questions
Can I withdraw money at any time?
Yes. The money is liquid and can be withdrawn at any time, subject to selling the relevant securities in the portfolio.
Can I switch investment managers?
Yes, but such a move may involve selling assets or transferring securities and could create a tax event.
Is this a conservative investment?
Not necessarily. The risk level depends on the portfolio's composition and the chosen investment policy.
How can the portfolio be tailored to my preferences?
Before management begins, an investment policy is agreed with you after reviewing your financial situation, goals and desired risk level.
What does opening the portfolio involve?
You grant the portfolio manager power of attorney only to carry out purchases and sales in your account. You receive periodic reports and have full access to view the account at any time.
What is the minimum amount for opening a managed investment portfolio?
In most cases, an initial investment of several hundred thousand shekels is required. Options now also exist for opening a managed portfolio with smaller amounts, sometimes even less than NIS 50,000.
Comparing the offers
Before choosing a managed investment portfolio, it is worth comparing the offers from different providers. The information prepared for you brings together management fees, minimum investment amounts, investment tracks, joining terms and additional services so you can choose the option that best suits your needs.
In summary
A managed investment portfolio is a solution for someone who wants a personalized investment and complete transparency.
It gives you the confidence of professional management without giving up control or direct ownership of your money.