A managed fund or account is an investment portfolio, owned by an individual investor and professionally managed by a hired fund manager. Managed funds are personalised and customised to meet the needs of the investor. The money you want to invest is used or allocated by the fund manager to buy assets in accordance with your investment objective.
When you place your money in a managed fund, you are allotted a number of units, which changes its value on a daily basis based on the dynamics of the market. The asset’s market values rises or drops with varying time intervals. You will then earn dividends from the fund based on the profit made by the fund.
Managed funds is a popular methodology of investing as they are easier to operate. With a single transaction, you can indulge in more than one investment and keep it diversified across market sectors and asset classes.
Features of Managed Funds:
- Professional Management of Funds: Your investment portfolio is managed by a professional fund manager who will monitor your assets and trade on your behalf. The manager also carries out research and investigation before investing your money. The fund manager is responsible in guiding you and helping you understand investment prospects.
- Diversification of Investment: Managed fund investment allows for creating a diversified portfolio. By investing in a managed fund, you can spread your risk across more than one asset class.
- Close Monitoring: The fund manager closely monitors your portfolio on your behalf and ensures all investment related decisions are taken on time to generate the best returns.
- Fund Manager Risk: This is one of the features of managed funds that could negatively impact your investment portfolio if not tackled well. If your fund manager takes poor decisions or has an unfavourable selection of funds, or his or her timing is bad, you could be the one suffering the brunt of it.
Benefits of Managed Funds:
Investing in a managed fund allows you to benefit from the experience and expertise of professional fund managers. These managers analyse the market trend and market movements and make a calculated and wise investment.
Some of the benefits of a managed fund are:
- When experts manage your investment portfolio, your mind can be at ease. As they are qualified to manage funds, they can be given the responsibility to make the investment decisions. They have all the access to information, research and processes.
- You can start as low as you want with managed funds. These funds do not require large sums of money to begin with. You can gradually increase your investment as and when you gain confidence in your fund manager and fund.
- With managed funds, you will have the freedom of handpicking your securities. In which case, most fund managers go for the performing securities, playing it safe.
- A fund manager ensures your investment is structured and based on real-time analysis. Strategic decisions can mean that the fund will outperform most of the times, if calculated well.
Actively managed funds are considered to outperform other funds, owing to the structured and planned approach. However, there is a higher risk as you give your investment portfolio in the hands of a third person, your fund manager.
GST rate of 18% applicable for all financial services effective July 1, 2017.