Managed Funds

What are they?
A managed fund enables you to pool your money with money from other investors to form an investment fund. The money in the fund is then invested by specialist investment managers on your behalf.

Managed funds come in many shapes and sizes. Some funds invest in just one type of investment whilst others, known as diversified funds, invest across a range of asset classes including Australian shares, international shares, fixed interest, property securities and cash.

So whether you have $1,000, $25,000 or $100,000 to invest, your money has access to the investment buying power of potentially millions of dollars. This buying power means you can take advantage of opportunities normally only available to those with extensive specialist knowledge or large corporations.

How are they structured?
The majority of managed funds are structured as unit trusts. When you invest, you are allocated a number of units based on the amount you invest and the current unit price. For example, if a unit in a fund is worth $1 and you invest $5,000, you would receive 5,000 units (less the entry fee, if charged).

The unit price reflects the value of the fund’s investments. As the value of the investments rise and fall, so does the unit price. To determine the current value of your investment, you simply multiply the number of units you hold by the current unit price.

Managed fund or direct investment
It is possible to invest directly in nearly all the investments in which managed funds invest. However, managed funds can provide you with a more diverse range of investment opportunities while taking the effort out of the necessary administration associated with many investments.

Specialist expertise
Managed funds give you access to trained investment specialists who constantly research and monitor the investment markets to determine the best possible investment opportunities. For example, share analysts conduct research on hundreds of different companies across many different industry sectors, to determine the best shares for their funds.

Time management
Managed investments offer investors a convenient and efficient method of investing. Your fund manager will handle all the paperwork and administration, provide you with regular information on the fund’s performance and provide annual tax statements and guidelines.

Accessing a diversified portfolio
Most managed funds invest across a range of investments to diversify investment risk and improve the chances of achieving consistent investment returns. Managed funds can help you diversify:

Within an asset class - by investing in such a managed fund, you get exposure to shares in numerous different companies at any one time, often including blue chip stocks. If you wanted to invest directly in this many companies, you would need a large amount of money to invest, not to mention the time and effort to research, monitor and administer each investment. With a managed fund you can invest with as little as $1,000 spread this across arange of investments.

Across asset classes - by investing in this type of managed fund you gain exposure to Australian and international shares, fixed interest, property, mortgages, infrastructure and cash.

APS Financial Planning can help you understand managed funds and recommend a strategy that suits your investment requirements.

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