How
managed funds work
Investors
in managed funds become unit holders in a pool of investments
managed by an external Fund Manager. Managed funds may
be a better alternative than direct shares for investors
who are inexperienced, have small amounts to invest,
are not interested in direct shares or unable to access
research information.
The
benefits are:
- Decreased
risk because your money is spread across a large number
of investments or across different asset classes.
- Management
of your investment by a team of experienced professionals.
- Simplification
of administration for tax purposes - you receive a
statement at tax time showing all details necessary
for completing your tax return.
- Income
from the investment can be automatically reinvested
or paid straight into your bank account if income
is required.
- Provides
access to investments that may be out of reach of
individual investors
- Easy
to make additional investments simply by adding more
of your savings
- Ability
to incorporate a regular savings plan
- High
liquidity as your investments can be redeemed (sold)
quickly
The
disadvantages are:
- Loss
of personal control - someone else makes all the decisions
(although this may also be seen as an advantage)
- Fees
such as entry fees, exit fees and ongoing management
fees - fees in their own right are not a bad thing
but check what you're paying for
- Changes
in fund manager personnel may effect performance
- The
investor has no control over the timing of buying
and selling decisions of investments within the fund
as this is done by the fund manager.
DISCLAIMER
The content of this article contains general securities
advice only, which is not intended for any particular
client. In preparing the content, Ethical Investment
Services Pty Ltd has not taken into account any particular
customer's investment objectives, financial situation
or particular needs. Accordingly, before acting on any
advice contained in the content, you should contact
your financial adviser to consider whether the advice
is appropriate in light of your particular investment
needs and circumstances.
|
