Why invest in a managed fund (2024)

What is a managed fund?

A managed fund is a professionally managed investment portfolio. In a managed fund, the investments of individual investors are pooled together with other customers.

A team of professional investment managers then invest the pooled money, often across a range of asset classes.

When you invest in a managed fund you purchase units in the fund rather than the assets directly. The number of units you own in a managed fund depends on the amount of money you invest and the value of each individual unit at the time of purchase. The unit price will fluctuate along with the market.

What are the top 6 benefits of investing in a managed fund?

1. It's not as expensive as you may think

We have a range of funds that require as little as $500 to invest.

2. Diversification

Managed funds can hold up to several hundred different investment types. These investments can be diversified across countries, asset classes (e.g. shares, property, bonds, cash), industries and companies. This way, you are automatically diversifying your investment. A “diverse” portfolio can reduce the impact of fluctuations in an investment’s market value.

3. Access to a broad range of investments you otherwise may not have access to

By pooling your money with other investors, you also gain access to a variety of investments that you may have not been able to invest in as an individual.

You can gain access to markets and strategies that rely on larger scale buying power. For example, the commercial money market will not give access to an investor who has less than $1 million. As a private investor you can access this market through your managed fund.

4. Having experienced investment managers looking after your money

Fund managers are experienced and qualified professionals who specialise in the selection and maintenance of investments. Sandhurst Trustees has over 100 years of combined expertise within our Fund Management team. The team has extensive contacts outside the company and access to detailed information. This, combined with in-house expertise, allows them to make informed timely decisions on your behalf.

The team is in constant touch with the markets in which they invest (or they engage other expert Fund Managers). This gives you the advantage of being able to invest in markets or sectors where you have little or no experience.

5. Opportunity to make regular contributions to your investment

Most of our funds offer the convenience of a regular savings plan so you can add to your investment on a regular basis. By purchasing additional units with a regular savings plan, you should end up paying less per unit over time. This is called ‘dollar cost averaging’, and it takes into account that while some units will be purchased at a higher price (meaning you’ll purchase less units at these times) others will be purchased at a lower price (meaning you’ll buy more units).

6. Benefits of compounding effect

In addition to a regular savings plan, reinvesting any income earned back into your principal investment will compound your investment. This can lead to a higher investment balance on which to earn more income in the future.

Want to invest but don’t have the money? You can borrow to invest.

Why invest in a managed fund (2024)


Why invest in a managed fund? ›

Access to a broad range of investments you otherwise may not have access to. By pooling your money with other investors, you also gain access to a variety of investments that you may have not been able to invest in as an individual. You can gain access to markets and strategies that rely on larger scale buying power.

Why do people invest in managed funds? ›

Benefits of using mFund

mFund is a popular and relatively easy way for individuals to invest in managed funds. One transaction can give you diversification across different asset classes and market sectors and access to investments that may otherwise be out of reach.

Why do people invest in actively managed funds? ›

Among the benefits they see: Flexibility – because active managers, unlike passive ones, are not required to hold specific stocks or bonds. Hedging – the ability to use short sales, put options, and other strategies to insure against losses.

What are the pros and cons of managed funds? ›

They come with many advantages, such as advanced portfolio management, risk reduction, and dividend reinvestment; however, there are many disadvantages to consider as well, such as high expense ratios and sales charges, tax inefficiencies, and possible management abuses.

Is a managed fund worth it? ›

Fund investing is an excellent choice for time-poor investors or those who don't yet have the financial knowledge to start stock-picking on their own. A fund manager makes the investments on behalf of the fund, meaning you can rely on their industry expertise.

Why choose a managed fund over an ETF? ›

Strategy and Risk Tolerance

Mutual funds are available for all different types of investment strategies, risk tolerance levels, and asset types. ETFs can be limiting as they are mostly passively managed indexed funds that invest in the same securities and mirror the chosen index.

Is it better to invest in a managed fund or ETF? ›

ETFs can be more tax-efficient than actively managed funds due to their lower turnover and fewer transactions that produce capital gains.

What are the risks of investing in managed funds? ›

You have no control over investment decisions and may not know the exact makeup of the fund's portfolio. The markets may go against the managed fund, which could lead to losses. Some managed funds may also carry additional risks based on the type of assets they invest in.

Do actively managed funds do better? ›

An influential study[3] which used the concept of Active Share to assess returns over a 20-year period, found that the most active managers outperformed their benchmarks by 1.3 percent annually after fees whereas “closet indexers” unsurprisingly performed worst, lagging the benchmark by around 0.9 percent a year.

What is a drawback of actively managed funds? ›

Actively managed funds generally have higher fees and are less tax-efficient than passively managed funds. The investor is paying for the sustained efforts of investment advisers who specialize in active investment, and for the potential for higher returns than the markets as a whole.

Which is better index funds or managed funds? ›

Index funds offer lower fees and tax efficiency. Due to their passive nature, they often perform in line with market benchmarks, making them suitable for investors seeking broad market exposure at lower costs. On the other hand, active mutual funds aim to outperform the market by employing active management strategies.

What is a good fee for a managed fund? ›

Types of Investment Management Fees

Management fees, whether paid as a mutual fund expense ratio or a fee paid to a financial advisor, typically range from 0.01% to over 2%. Generally, the range in fee amount is due to management strategy.

Is now a good time to invest in managed funds? ›

Is now a good time to invest in managed funds? ​ Investing is a long-term decision, so there's never a "bad" time, nor is there a "good" time. You will need to consider how much you're comfortable with.

What are the disadvantages of investing in managed funds? ›

Expensive fees

The foremost disadvantage is the high fees charged by fund managers. Managed funds often charge far higher fees than ETFs, LITs, or listed investment companies (LICs).

Why might someone choose to invest in an actively managed fund why might someone choose to invest in a passively managed fund? ›

Passive investing tends to perform better

Despite the fact that they put a lot of effort into it, the vast majority of of active fund managers underperform the market benchmark they're trying to beat. Even when actively managed funds do experience a period of outperformance, it doesn't tend to last long.


Top Articles
Latest Posts
Article information

Author: Foster Heidenreich CPA

Last Updated:

Views: 5257

Rating: 4.6 / 5 (56 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Foster Heidenreich CPA

Birthday: 1995-01-14

Address: 55021 Usha Garden, North Larisa, DE 19209

Phone: +6812240846623

Job: Corporate Healthcare Strategist

Hobby: Singing, Listening to music, Rafting, LARPing, Gardening, Quilting, Rappelling

Introduction: My name is Foster Heidenreich CPA, I am a delightful, quaint, glorious, quaint, faithful, enchanting, fine person who loves writing and wants to share my knowledge and understanding with you.