Introduction to Managed Funds

Whilst information on the managed fund abounds, Australians new to the concept will have to either see their financial advisor or search far and wide to gain some insight into this form of investment. According Axiss Australia, managed funds are growing by 10% year-on-year and could reach a massive A$2.4 trillion 8 years from now. If you are not in the know, gaining a better understanding of this high-yield type of fund will help you make an informed decision on where to invest and who to make your investment with.

What is a Managed Fund?

A managed fund is the collective investments made by various individual investors in a single fund. The money invested in the managed fund, is run by a fund manager, and used to acquire those assets that fall within the ambit of the managed fund. The value of the investments made by the fund manager can either increase or decrease, depending on market behaviour. A good example of fluctuating performance is LPT (Listed Property Trusts). The LPT market showed a phenomenal positive return of 34% in 2006. 1st quarter 2007, the same market showed a negative return of 2.3%. This is 9% below the overall share market performance. 

In all fairness, the downswing was mostly limited to stapled securities – which has a tendency to react more vehemently (very much like the stock market) to news, trends etc.  The unlisted property trust index increased to 4.8% during the same period and, supported by strong market fundamentals, the real estate market is still offering positive returns and growth.

Is the Managed Fund a good investment?

Most of the Australians funds are performing well, yielding returns higher than you would get on many other forms of savings and investment plans. In example, a managed fund like the ING OA IP ING Emerg Comp – NE has grown by 39% over the past three years, and the CFS MIF - Geared Share Fund by nearly 55%. Naturally, selecting the right managed fund with the right fund manager is important.

Consider visiting the Australian Government Invest Australia website for information on managed funds, fund managers and trends: Click Here.

What are the Fees involved?

There are a variety of fees associated with a managed fund: Entry / Exit Fees, withdrawal fees, management fees (including the fund manager fee), etc. Many of the funds waive entry and exit fees nowadays. This is a substantial saving, given that you could be asked to pay as much as 5% of the value of your investment to enter.  On a A$50,000 investment, that is A$2,500.

The fees differ greatly from one managed fund to the next. When you study the prospectuses, ensure that you scrutinise this aspect of the various managed funds as well.

Investing in a Managed Fund

In addition to visiting the Invest Australia website, you can also request a prospectus from the various managed funds to evaluate their performance and to understand where they invest. Information on the fund manager is normally also detailed in each. You could also solicit the help of an independent financial advisor if you are unsure about which managed fund to choose.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.