Managed Investments
Chances are, you may find that during your financial education process you have spare cash which is not generating the income it could be during your learning process.
Money makes money so investors generally don’t like to leave it sitting idle in a plain Bank account. The answer could be investing in Managed Funds.
What Is A Managed Fund?
Well it is exactly that – an investment that is managed professionally by an expert fund manager who invests in a variety of investments. The actual type and mix of investments within the fund depends on a predetermined mandate communicated by the Fund Manager.
With Managed Funds, your money is pooled together with that of other investors to create a single strong fund that provides significant investor benefits. This includes an instant increase in buying strength. Investors own a proportion of the investment portfolio equal to the size of their investment, and are entitled to any profits and distributions (dividends). Having said that, they are also subject to losses if the value of the portfolio declines.
Which Managed Fund?
The variety of asset classes is wide, and management styles range from very conservative to aggressive. There is a Managed Fund tailored to virtually every set of investment goals, time frames and risk tolerance and are an increasingly popular tool for investors to accumulate and preserve wealth.
There are predominantly three types of Managed Funds trading on ASX:
- Listed Investment Companies
- Listed Investment Trusts
- Absolute Return Funds
Managed Funds can effectively reduce the risk of being exposed to a single security, by investing in a portfolio of securities, thereby reducing the impact of a poor performance by any single security.
While ASX can be the first port of call for investors looking to learn about Managed Funds, many financial institutions, Comsec and other organisations offer a lot of information and investment choice. Investors should look around as some licenced organisations offer their own investments which do very well.
As you are aware, at AFA Wealth we are about educating investors, so rarely do we analyse investments for investors, instead we discuss the control the investor is giving to the fund manager and generally suggest they invest only the minimum entry.
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