Managed funds invest your money on your behalf. They generally pool your money along with funds provided by others and select investments for you. Managed funds may invest in any of the four main asset classes (cash, fixed interest, property and shares).
Evaluating managed funds - good management of funds is often characterised by:
- A consistent process for managing money. All funds promote an individual method of funds management, and the best funds stick to the process they’ve outlined.
- Financial stability, along with an experienced team, with a good compliance record and a fee structure that’s transparent and easy to understand.
- Good historical returns, including exceptional and poor returns from a fund, need to be compared to what happened in the rest of the investment market at the time and remember that past performance is no guarantee of future performance.
The pros and cons of managed funds.
Pros:
- You access professional management - you may not have the time or the skill to manage your own investments.
- Diversification - you may gain access to a greater spread of investments than you otherwise would.
- Starting small - you don't necessarily need a lot of money to invest in a managed fund.
- Liquidity (access to your money) - if you need your money, you may simply be able to sell your shares or units in the fund at the current rate (which may have changed from when you originally invested and may not be made immediately available).
Cons:
- Fees - entry, exit and ongoing management fees may apply. Make sure you compare the various funds on offer and read the fine print.
- Diluting profits - diversification can limit your risk but it may also dilute your profits.
- Tax - a fund may be managed so that you pay more tax than if you had managed your investments yourself.
- Losing control of your money - others may be involved in making decisions regarding where your money is invested.
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As you can see managed funds can be a highly effective investment vehicle. As for what’s right for you, that decision is made easier with the right advice.
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*OnePath Funds Management Limited, the issuer of this product, is a subsidiary of ANZ. ANZ is an authorised deposit taking institution (ADI) under the Banking Act 1959. The issuer is not an ADI and an investment in the fund is neither a deposit nor liability of ANZ or any member of the ANZ Group. Neither ANZ nor any member of the ANZ Group stands behind or guarantees the issuer or the capital or performance of any securities issued to, or assets held by, you. Your investment is subject to investment risk, including possible delays in repayment and loss of income and principal invested. ANZ recommends that you read the ANZ Financial Services Guide and the relevant Product Disclosure for further information about its association with the issuer, any benefits that it may receive and other important information before deciding whether to acquire or hold this product.
ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited, ABN 11 005 357 522, the holder of an Australian Financial Services licence.
The information provided is general information only and does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. Before making any decision to acquire, hold or sell any financial product, ANZ strongly recommends that you seek financial planning and/or tax advice and read ANZ’s Financial Services Guide (PDF 104kB), the relevant Product Disclosure Statement and/or Terms and Conditions. Terms and conditions are available on application. Fees and charges apply.
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