How managed funds work

As the value of the fund's investments rises or falls, the fund's unit price - and the value of your investment - changes accordingly. 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 either take distributions as cash or reinvest them in the fund. If you choose to reinvest, there is generally no additional contribution fee, and you increase your potential to receive higher capital growth and distributions in the future. If you re-invest, you can benefit from the effects of compounding. The longer you're invested for, the greater the difference in compound interest.

See how compound interest works in our ‘Investment basics' section.

You can take your distributions as cash and use it as an income. Payments are distributed on a per-unit basis.

Distributions can be paid monthly, quarterly, half-yearly or annually, depending on the fund.

Find out more about income and capital growth.

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

What fees and charges may apply?