Easy Investing Through Managed Funds

No worries. An option known as “managed funds” gives even novice investors with limited funds major investing power and the guidance of trained investment professionals.

What are Managed Funds?

Managed funds are just what they sound like – funds in an investment that are managed for you by a qualified professional (often referred to as a “fund manager”).

How do Managed Funds Work?

Let’s say you’re a new investor. Let’s also say that property values are rising, and you would like to get involved in investment properties, but you lack the funding to do it alone.

When you get involved with a managed fund, your investment is combined with that of other investors, giving all of you more buying power and a chance to profit from investment markets you otherwise couldn’t afford to get into.

A managed fund is set up as a unit trust. Think of it like buying shares in a company. Each trust has a certain number of units (like shares), with a certain value. As the value of the overall trust or fund fluctuates, so does the value of each of your shares or units.

Once you buy into a managed fund, your fund manager handles all of the investment details for you. You may have to pay an entrance fee, exit fee, or ongoing fees during the life of your investment for the benefits you’re receiving over independent investors.

Benefits of Investing in Managed Funds

There are several benefits for getting involved with managed funds, especially as a new investor or one with limited capital:

• You get more investing power by combining capital with others.
• Investments are professionally managed.
• Funds are often diversified (less risk for investors).
• You don’t have to spend a lot of time researching individual investment opportunities.
• You don’t have to know anything about the administrative side of investing.
  
  

There are different types of managed funds – some may invest in property, some in international shares, and others strictly in Australian investments. Some invest your money in a combination of investment types, giving you even greater diversity. Chances are that you’ll find a managed fund run by a qualified professional or firm in an investment area that piques your interest.

Article correct at its author date: June 2008. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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