What are managed investment funds?

By pooling your money with other investors, the manager of the fund has the buying power to invest in many different asset classes and sectors on your behalf to spread your investment. The professionals managing the fund work to achieve generally better results than you might expect to achieve on your own.

How managed investments work

Every time you invest in a managed fund, you're buying units in that fund, which is why they are sometimes called unit trusts. As a unit holder, you may, depending on your choice, get exposure to investment assets such as shares, property, fixed interest and cash. Over the period in which you invest, the unit price may move up and down as the value of the investments within the unit trust rises or falls.

When the market value of an investment increases, it is known as capital growth. When funds realise a capital gain or generate income, investors are given a payment called a distribution.

You can take distributions as cash or sometimes reinvest them in the fund. If you choose to reinvest, there is generally no additional contribution fee, and you can increase your potential to receive higher capital growth and distributions in the future.

Fund manager fees

Fund managers charge once-off and ongoing management fees for their investment expertise. Charges vary from manager to manager and fund to fund, but you could expect to pay fees of around 4% of your investment amount when joining a fund, and around 2% of the balance of your investment per annum. When considering a particular fund, carefully read the Product Disclosure Statement (PDS) for the fund, which sets out entry, exit, management and other fees and commissions.

Managed funds benefits

Many people simply don't have the time or expertise to follow the investment market. The advantage of a managed fund is that professional fund managers actively investigate and monitor the investments they make on your behalf. With a managed fund, you can stick to what you do best and put professionals to work for you.

Specialist fund managers can locate opportunities such as global property and international shares that may be out of reach of the individual investor.

A managed fund is an easy and convenient way to invest while you get on with your life. You can make a one-off lump-sum payment, or choose a regular savings plan that you can pay into with regular deductions. As well as receiving regular reports, with many of today's funds you can keep track of your investments at any time by viewing your accounts online.