What is a managed fund?
So, you have just sold some property or come in to some money through an inheritance and it is burning a hole in your pocket but you don’t have time to research all of your different options and go through them with a fine tooth comb. There are so many choices when it comes to investing, all options offering different levels of returns and also different risks.
Increasingly, time-poor investors and those looking to outsource investment decisions are turning to managed funds.
For those who are unfamiliar with how they work, here is a quick overview:
- Your money is combined together with other investors into one large pool of funds.
- Professional fund managers invest in a diverse range of assets not often available to individual investors.
- You own a specified number of units that represent the dollar value of your investment (less any fees and costs).
- You generally receive returns consisting of income (earnings made by the fund’s assets) or capital growth (increase in market value of the assets held in the portfolio).
What are the benefits?
- Diversification allows you to spread the risk with exposure to various asset classes and market sectors, which means your investment returns are likely to be more stable. It helps smooth out short-term ups and downs in returns.
- Experienced investment managers have the tools, education and knowledge so you don’t have to spend time researching the markets.
- It’s easy! Plus with some Funds you can access your balance, statements, reports, fund performance and even transact 24x7 online.
Other things to consider
Now that you have an idea of what you can invest in, you should consider:- what returns you need to achieve your goals
- over what time frame you will invest
- the level of risk you are comfortable with.
As with anything related to the share market and investing, the value of your investment will rise or fall reflecting the value of the shares (and other assets) held within the fund’s portfolio. The higher the expected return, the higher the risk.
Look at long-term performance of managed funds
If a fund performs well in one year, this is no guarantee it will do just as well the next year. A fund's performance over 5 to 7 years gives you a better indication of how it will perform in the future.
Make sure you review the company’s investment strategy, asset allocation, track record and reputation before diving in. Remember that you’re relying on the skills of other people and you don’t have control over their investment decisions.
If you’re in the market for either an income or growth managed fund that has consistently delivered results in accordance with objectives and offers an unparalleled level of service, then we’d love to talk with you. TPT Wealth could have just what you’re looking for.
