MANAGED FUNDS

Summary

A managed fund pools money from investors to invest in a diversified portfolio managed by a professional. It offers benefits like professional management, access to a broad range of assets, and ease of investment with minimal capital. It's suitable for various risk profiles, from conservative to high-risk growth funds. While it provides convenience and regular updates, it lacks individual control over investment decisions and involves management fees. Choosing the right fund requires consideration of personal investment goals and can be facilitated by financial advisors, making managed funds an ideal starting point for new investors to learn and grow their investment skills.

Takeaways

• 💼 A managed fund pools money from multiple investors to invest in a variety of assets such as shares, fixed interest, property, etc.
• 📈 Your investment in a managed fund is represented by units, and the value of these units fluctuates based on the performance of the underlying assets.
• 🌍 There is a vast array of managed funds available, catering to different asset classes, geographies, and investment strategies.
• 🔍 Investors can choose funds based on their risk tolerance, from conservative to high-risk growth funds, aligning with their investment profiles.
• 💰 The advantage of managed funds includes professional management, allowing investors to access a diversified portfolio with a relatively small initial investment.
• 📊 Managed funds offer convenience with administration and tax matters handled, and they provide regular reporting to keep investors informed.
• 🚫 A key disadvantage is the lack of control over individual investment decisions, as the fund manager makes choices on behalf of all investors.
• 💵 There is an annual management fee associated with managed funds, which is a cost for the professional management service.
• 📈 Returns from managed funds are not guaranteed, and it's important for investors to understand the risks involved.
• 🤝 For first-time investors, managed funds can serve as an introduction to investing, potentially building confidence to make individual investments in the future.

Q & A

What is a managed fund?

A managed fund is an investment where your money is pooled with other investors and invested in various assets such as shares, fixed interest, property, etc., by a fund manager on your behalf.

How do you receive units in a managed fund?

When you invest in a managed fund, you receive units in that fund at a certain price, and the number of units you hold does not change unless you add more money or withdraw some.

What factors affect the unit price in a managed fund?

The unit price in a managed fund fluctuates daily based on the value of the underlying assets in which the fund is invested.

What types of assets can a managed fund invest in?

A managed fund can invest in any asset class, including shares, fixed interest, property, and others, and can be tailored to specific geographies or economies.

Why might an investor choose a managed fund over individual investments?

Investors might choose managed funds for the professional management, access to a diversified portfolio with a small amount of money, and the ease of administration and tax handling.

What are the advantages of managed funds for new or first-time investors?

Managed funds are advantageous for new investors as they are managed on their behalf, allowing access to a diversified portfolio with a small initial investment, and include administrative and tax services.

How does the risk profile of an investor influence their choice of managed fund?

Investors can choose managed funds based on their risk profile, with options ranging from conservative to high-risk or growth funds that invest in assets like shares and property.

What are the disadvantages of investing in a managed fund?

The disadvantages include a lack of control over individual investment decisions and the annual management fees charged by the fund manager.

How can an investor choose the best managed fund for their needs?

Investors can consult with a financial advisor or contact fund managers directly to discuss options based on their risk profile, investment time frame, and personal circumstances.

What is the process for investing in a managed fund?

The process for investing in a managed fund is straightforward, involving filling out a form, and can be done by contacting a financial advisor or fund manager.

How can managed funds serve as an introduction to investing for some individuals?

Managed funds can serve as an on-ramp to investing, allowing individuals to learn and gain confidence through a managed approach before venturing into individual investments.