Returns

A managed fund makes money in a number of ways:

profits from the sale of assets - growth
income generated by assets
currency movements in unhedged and overseas funds.

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Profits on the sale of assets

Your fund makes a profit when the price of its assets goes up, and the fund manager sells the units for more than they paid for them. This profit is known as a 'realised' or 'capital' gain.

Income generated by assets

When your fund receives interest from cash investments or bonds, dividends on shares, or income from property securties, some of the income is paid to you as a distribution.

Distributions

Distributions are the payments you receive if your managed fund makes money. Distributions are paid at the end of a set distribution period, for example, monthly, quarterly or half yearly. You can take distributions as income, or reinvest them.

Currency movements

If a managed fund holds overseas assets in shares, bonds or property, it may be affected by currency movements, particularly in relation to the Australian dollar. An international fund may make currency gains if the currency movements result in a capital gain.

Reinvesting distributions

If you do not need an income stream, you can choose to reinvest your distributions, usually at no fee. Due to the effects of compounding returns, reinvesting your distributions can make a huge difference to your returns from managed funds.

Find out more about investment

Download a copy of 'Investing made easy' (PDF 1.73MB).
Find a financial adviser using BT's Adviser Referral Program.
Learn about BT's managed funds.