Managed funds are one of the easiest ways of investing your money. Basically all you need do is write out a cheque and fill in a form. This can often be downloaded from the Internet or done online. Many people want to take a peek at what their managed fund invests in, so that they can choose one that most closely reflects their own choice. But this is not strictly necessary.
A managed fund has a manager who takes care of all the day-to-day investing of the investors’ pooled money - hence the name, managed fund. Not all managers are equal, though. Some managers manage the money aggressively - or at least positively; others take a more passive role. In other words they simply leave the money in the same types of investments whether it is making a profit or not. After all, they get paid their fees whether share trading is going up or down.
Those managers who take a greater interest in their responsibilities work a little harder for their investors. They watch the fund like a hawk and see to it that the money is invested in shares that are doing well. They make sure that there is enough diversification to ensure a minimum risk.
There are many different kinds of managed funds. Some have entry and exit fees; some only have entry fees and no exit fees. Others have neither entry or exit fees, but they do have ongoing management fees. Or they may have all three types of fees. In some cases entry fees may be rebated by 100%. It is up to the investor to find out all this by reading the product disclosure statement that all funds must provide.
Managed funds also differ in the kinds of share trading they pursue. They might only buy shares nationally, or they may go international - or a mix of the two. Some are only interested in real estate shares or shares in the agricultural sector, for example; others go for mining or another type of investment. The best types of managed funds are those who diversify their portfolio as much as possible to minimise the risks involved. You can find out all this from the product disclosure statement.
You don’t have to read it of course and it’s a lot easier if you don’t, however, you really should read and understand anything you are going to put your money into. Otherwise you may find that you are investing in something that offends you. For instance, if you were totally against gambling, you wouldn’t want to invest in gambling casinos.
