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.

Outlines

00:00

💼 Understanding Managed Funds

A managed fund is an investment vehicle pooling money from various investors to invest in a diversified portfolio managed by a professional fund manager. Investors receive units in the fund, and the value of these units fluctuates based on the performance of the underlying assets. Managed funds offer a wide array of choices, allowing investors to select funds based on asset types, geographical focus, or risk profiles. They are advantageous for new investors as they require minimal effort in managing and provide access to a diversified portfolio with a small initial investment. Additionally, managed funds handle administrative and tax matters, offering regular reporting to keep investors informed. However, they come with a management fee and lack the personal control over investment decisions that individual investing allows.

05:00

🌐 The Role of Managed Funds in Investment Learning

Managed funds serve as an accessible entry point for new investors, allowing them to gain exposure to a broad range of assets and learn about investing without the complexities of individual stock picking. As investors become more comfortable and knowledgeable through their managed fund experiences, they may gain the confidence to venture into direct investments. This approach allows them to 'learn while they earn,' gradually building their investment skills and portfolio. For further insights, the video encourages viewers to explore additional resources provided through the mentioned links.

Keywords

💡Managed Fund

A managed fund is a type of investment vehicle where investors' money is pooled and managed by a professional fund manager. The fund invests in various assets such as shares, fixed interest, property, or a mix of these. In the script, it is described as a way for investors to gain exposure to a diversified portfolio without having to manage the investments themselves. The managed fund is central to the video's theme as it is the main investment product being discussed.

💡Investment

Investment refers to the act of committing money or capital to an asset with the expectation of generating income or profit. In the context of the video, investments are made in managed funds, which in turn invest in a variety of underlying assets. The script emphasizes the importance of choosing the right type of investment based on an individual's risk tolerance and financial goals.

💡Fund Manager

A fund manager is a professional who oversees the investment strategy and decision-making for a managed fund. They are responsible for selecting the assets to invest in and managing the fund's risk and return profile. The script highlights the role of the fund manager as a key advantage for investors, especially those who are new or lack the expertise to make investment decisions themselves.

💡Units

Units in a managed fund represent an investor's share or ownership in the fund. The number of units an investor holds does not change unless they add more money or withdraw some, but the value of each unit can fluctuate daily based on the performance of the underlying assets. The concept of units is crucial in understanding how investors participate in a managed fund and how their investment value can change over time.

💡Asset Class

An asset class refers to a group of investments that share similar characteristics and are subject to the same laws and regulations. Examples include shares, fixed interest, property, and cash. The script mentions that there are managed funds for every asset class, allowing investors to choose funds that align with their investment preferences and risk appetite.

💡Risk Profile

A risk profile is an assessment of an investor's willingness and ability to take on risk in their investment decisions. The script discusses how managed funds can be tailored to different risk profiles, offering conservative, balanced, or high-risk (growth) options. Understanding one's risk profile is essential for choosing the appropriate managed fund.

💡Diversification

Diversification is a risk management strategy that involves spreading investments across various asset classes to reduce the impact of any single investment's poor performance. The script highlights how managed funds can provide instant diversification, as they invest in a wide range of assets, which can help to mitigate risk for investors.

💡Annual Management Fee

The annual management fee is a cost charged by the fund manager for their services in managing the fund. It is mentioned in the script as one of the disadvantages of managed funds, as investors must pay this fee to have their investments professionally managed. The fee is an important consideration when evaluating the total cost and potential returns of a managed fund.

💡Financial Advisor

A financial advisor is a professional who provides guidance and advice on financial matters, including investment decisions. The script suggests that investors can consult with a financial advisor to help choose the most suitable managed fund based on their individual circumstances. Financial advisors can play a crucial role in helping investors navigate the complex world of managed funds and other investment options.

💡Investment Journey

The investment journey refers to an individual's path through the process of investing, learning, and growing their wealth over time. The script uses the term to describe how managed funds can serve as an entry point for new investors, helping them gain experience and confidence before venturing into other, potentially more complex, investment strategies.

Highlights

A managed fund pools money from multiple investors to invest in various assets like shares, fixed interest, or property.

Investors in a managed fund receive units whose number changes only with additional investments or withdrawals.

The unit price fluctuates daily based on the value of the underlying assets.

There's a wide range of managed funds catering to different asset classes, geographies, and economies.

Investors can choose funds based on specific asset types or a mix of assets.

Managed funds are suitable for various investment profiles, from conservative to high-risk growth funds.

For new or first-time investors, managed funds offer the advantage of professional management without the need to make individual investment decisions.

With a small amount of money, investors can access a diversified portfolio of assets through managed funds.

All administrative and tax tasks are handled by the fund, simplifying the investment process.

Investors receive regular reports, staying informed about their investment's performance.

The main disadvantage is the lack of control over individual investment decisions as the fund is managed on behalf of all investors.

Fund managers charge an annual management fee for their services.

Investing in a managed fund is straightforward, with the challenge being the selection of the most suitable fund and fund manager.

Financial advisors or fund managers can guide investors in choosing the right fund based on their risk profile, investment time frame, and personal circumstances.

Managed funds serve as an on-ramp for investors, allowing them to learn and gain confidence to make individual investments in the future.

Investors can use managed funds to learn while they earn and develop the courage to venture into individual investments.

Transcripts

[Music]

a manag fund is an investment where

where your money is pulled with other

investors and invested in a fund that

then invests in in assets be it's shares

or fixed interest or property or

whatever um that's managed by a fund

manager on your behalf and so when you

invest in a in a managed fund you

receive units in that fund at a certain

price and the number of units doesn't

change unless you put more in or or take

some money out but what does change is

the unit price and the unit price will

go up or down every day depending on the

value of the underlying

assets there is literally a a manage

fund for every asset class for every

geography every economy so uh you can

choose from a wide range of of managed

funds you can have very specific funds

such as you could choose to invest just

in a fund that invests New Zealand

shares or you can have a fund that

invests in shares and fixed interest and

property and cash and and all sorts um

so you can you can either base your

choice on the asset type so shares or

fixed interest or property or you can

have a um a managed fund that that

covers an a range of assets so you can

and that's really to suit your own

investment profile so if you're a lower

risk investor you can choose a

conservative fund um if you're more of a

of an average or a balanced investor you

can have a balanced fund which has a mix

of low risk and high risk assets or you

can have a high risk fund or growth fund

which invests in assets such as shares

and and property so really um the choice

is is

endless the advantages of a managed fund

particularly for a new or a first-time

investor uh that uh the fund is is

managed for you on your behalf so you

don't have to be worrying about markets

and economies and and trying to decide

what assets to buy or sell um and the

second thing is that you can access a

managed fund with a relatively small

amount of money um and so for $1,000 for

instance you can get access to a

portfolio of thousands of different

assets different in individual

Investments that you couldn't otherwise

access yourself and you couldn't

research them and you couldn't monitor

them and so on so so really to have a

fund uh professionally managed and even

for a relatively small amount uh they

are the key advantages um also all the

administration and tax is taken care of

so it's pretty straightforward it's it's

easy to invest in a managed fund and

easy to to gain access to your money out

of a manage fund as well um you receive

regular reporting so you're always up to

date with what's happening with your

investment so that gives you an

opportunity to learn as you

earn the main disadvantage of a managed

fund is that it is managed on your

behalf so you don't get a say in the

investment decisions so the fund manager

manages the fund on behalf of all the

hundreds or thousands of investors who

are invested in it so they can't take

account of your particular investment uh

wishes so the fund manager might invest

in an asset that you don't particularly

like or they might not buy enough of an

asset that that that you like um so you

don't have that that control um or that

ability to make individual investment

decisions having said that uh the fund

manager still has to manage the fund in

accordance with the rules of the fund so

you you broadly know what you're getting

but you can't choose pick and choose the

individual Investments um the other

disadvantage I guess is that for the

privilege of having the fund manager

make those decisions on your behalf they

charge a fee so there's an annual

management fee um so they're the they're

the key uh disadvantages and I guess

like like any other asset the returns

from a managed fund can't be

guaranteed investing your money or

taking your money out of a manag fund is

actually the easy bit uh that's

literally just filling out a form uh the

harder part is choosing which fund is

best suited to you because there's such

a wide variety of funds and fund

managers available that uh you really

need to put a little bit of time into

deciding which fund and and fund manager

is best suited to you so you can speak

to a financial advisor or contact a a

fund manager directly and they can talk

you through the options and that'll be

about deciding what what fund or

combination of funds suits your your

your AG and Stage uh your risk profile

your investing time frame and your your

personal circumstances uh so once you've

decided to do that uh or what fund you

want to invest in it's literally as easy

as contacting a a financial advisor or a

fund manager by phone and look they will

do all the

rest look I found over the years that

investors have actually have really

enjoyed using managed funds as sort of

an on-ramp to their investment journey

and that they'll start with a with a

manag fund they'll have a good

experience they'll learn learn about

investing through their fund manager and

then it will give them courage to then

venture out and and actually make their

own Investments individually which they

can that sit alongside their managed

fund investment so to use a managed fund

you can learn while you earn and as I

say it can develop courage too um to

then go on and invest on your own so for

more information please see the

following

links

[Music]