A managed fund is something that has been developed to typically aid small investors. The management side of things is usually taken care of by insurance companies and financial experts. The fund itself is a mutual fund with investors in various kinds of securities in order to reduce the amount of risk of loss when in a downturn. Minimising risk is an essential component when it comes to investment management.There are lots of different types of managed funds. Let’s take a look at some of these in more detail…
- Income funds – An income fund is also sometimes referred to as a defensive fund. These are centred on generating an income stream whilst also ensuring that risk of capital loss is kept low.
• Growth funds – In direct contrast to income funds, growth funds are centred on long term capital growth. Most investments in this instance tend to be in properties and / or shares.
• Index funds – As you may have gathered by the name; this type of fund is focused on achieving performance returns that are in line with a selected market index, such as the Standard & Poor’s 500 Index (S&P 500).
• Active funds – This fund type is centred on outperforming a particular index, such as the one just mentioned.
• Diversified funds – These are often referred to as multi-sector funds. They diversify across a number of various asset classes.
• Single sector funds – This is the direct opposite of the fund type just mentioned. In this instance the investor is only interested in one asset class i.e. either property, fixed interest, national shares, international shares or cash.
No matter what type of managed fund you want to invest in, one thing is for certain; you need to find a high quality fund manager. Head to https://www.investopedia.com/terms/f/fundmanager.asp to find out what a fund manager does. Fund management is largely centred on experience and vast market experience. For example, when it comes to active funds, the fund manager needs to actively and effectively research the market so that buying and selling assets is focused on the fund’s objective. When it comes to diversified funds they will need to delve into asset allocation before investment is made. Their role is crucial. So, how do you find the best one for you?
Portfolio composition is imperative. It is all about risk and a portfolio with variance in range and types of investments is one that is going to provide you with greater confidence. They should also enlighten you to other investments, aside from funds. Start at https://budgetboost.co/best-short-term-investments/ for some more information on the different types of investments that are good to team with funds.
In addition to this, you will, of course, need to look at the charges in place. Make sure the fund manager has a good reputation as well. Reading reviews from previous customers is always recommended. In addition to this, geographical weightings can sometimes play a role. This is if you are looking at country / sector specific funds, for instance if you are looking at a single sector fund based on national shares.
Infographic provided by Institutional Advisory Services Group