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Managed Funds

What are managed funds?

A managed fund pools your money with money from other investors to form an investment fund. Specialist investment managers then invest the money in the fund on your behalf. Pooling your money means your money has access to the buying power of millions of dollars.

Managed funds come in many shapes and sizes. Some funds invest in just one type of investment, while others known as diversified funds invest across a range of asset classes.

Most managed funds are ‘unit trusts’ which means it is divided into units that reflect the value of the trust’s assets. When you invest you buy units in the trust. For example, if on a given day a trust’s assets are valued at $10 million and there are 2 million units on issue then each unit will be worth $5. Most managed funds value their units on a daily basis, according to the market values of the underlying investments. The fund manager receives a fee for managing the portfolio, usually based on a percentage of the asset value.

Managed funds pass on income and realised capital gains to investors, who are responsible for declaring this in their tax return and paying any tax due. Most managed funds issue tax statements at the end of each financial year providing all the information investors need to complete their tax returns.


Uses for managed funds

A managed fund can be used for many purposes including the following:

  • Superannuation
  • Children’s education
  • Tax planning
  • Home deposit
  • Retirement Planning

Benefits of managed funds

Convenience: Managed funds provide a convenient and efficient method of investing in one or a number of asset classes. Through managed funds you can invest in asset classes that may otherwise be difficult to access, for example, government and corporate bonds, and international companies. Managed funds provide consolidated reporting so that even if it invests in 50 companies, you receive single statements for the fund rather than its underlying investments.

Diversification: Managed funds typically invest in a broad range of individual investments which provides diversification within the asset class or, for diversified funds, across asset classes.

Professional Management: Your investment is managed full-time by highly trained professionals with access to extensive market information and research.

Regulated:Managed funds are closely regulated by the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.