Learn more about Managed Funds
What are managed funds?
Managed funds are investment pools managed by experts, and allow investors to combine funds.
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Different types of managed funds
The main types of managed funds are retail managed funds, ETFs, listed investment companies and model portfolios.
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How to access managed funds
You can transact with a managed fund directly, through your financial adviser or stockbroker, or through a platform.
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Who runs a managed fund?
Managed funds are managed by responsible entities, investment managers, consultants, custodians and administration companies.
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Managed fund units and unit prices explained
Most managed funds are unit trusts. When you invest into the managed fund you are really buying a share of the unit trust, meaning you are buying units in it.
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What are asset classes?
The main asset classes are shares, property, bonds and cash, with different risks and returns.
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Managed fund fees – how much and getting what you pay for
The more fees you pay, the higher your investment returns must be to make up for them.
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How managed fund investments are taxed
You must declare income you receive from your managed fund in your annual taxation assessment, so it can be taxed at your marginal tax rate.
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History of managed funds in Australia
Managed funds in Australia evolved out of the trust structures started by friendly societies.
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What is diversification?
Diversification is when you mix different asset classes into your portfolio to manage your investment risk. Different asset classes have different expected investment returns and risks. Using these characteristics, managed fund portfolio managers can design their portfolio with very specific investment return expectations and risk features. Growth assets include equities and property. Defensive assets include […]
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Australian equities
Australian shares are the most popular asset class for investors thanks to privatisations and the power of dividend imputation and franking credits. Australia's sharemarket is valued at almost $2 trillion. Investors make money from shares in two ways: from the change in the price of shares and from dividend payments. Dividend payments are concessionally taxed […]
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International equities
Australian company shares make up approximately 2% of all company shares available around the world, so investors should consider investing in international companies to access global opportunities. Australia's sharemarket is heavily focused on financial, resources and healthcare companies. Investors who want exposure to high-growth industries like technology or digital media should consider investing in international […]
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Fixed income bonds
Fixed income and bonds are the world's biggest asset class. Understanding how they work will help you see how they can fit into your managed funds portfolio.
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Property
Property is all around us in the form of office buildings, factories, retail outlets, hospitals and farms. It is an attractive asset class because it has both growth and income characteristics.
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How managed funds handle currency risk
Managed funds that invest overseas have currency risks because when they buy their foreign assets or receive income from that asset they have to do these transactions using foreign currencies. Misjudging these currency transfers can turn a seemingly profitable investment into a loss.
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What is my investment risk profile?
Your investment risk profile is a description of what type of investor you are. This can encompass how much investment risk you are willing to take, your investment time horizon and what level of volatility (performance variability) you are prepared to accept.
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Should I see a financial adviser?
Financial advisers are professional experts who can help you understand your investment profile, design your investment strategy and choose managed funds.
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How do I choose the best managed fund?
Although not as important as determining your investment objectives or the long-run asset allocation for your portfolio, choosing the best managed fund can make a real difference both in terms of likely investment returns and the fees you will pay.
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Monitoring your portfolio
After the hard work of establishing your investment goals, deciding your asset allocation and selecting your managed fund, comes the fun part: seeing how your individual investment decisions play out over time.
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Cash
Cash is an asset class that everyone thinks they understand until they have to start investing in it. Cash is physical and electronic money that you can use for transactions. When you invest in cash you may only receive an interest payment because it does not earn a capital return. Bank term deposits, credit funds, […]
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Alternatives
Alternative assets are those that don’t easily fit into the mainstream asset class categories like equities, bonds, property or cash. While some alternative assets are exotic and higher risk, not all are. You need to understand each alternative investment case by case. Alternative assets are those that can’t be easily classified into the mainstream asset […]
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Investment styles
Investment style is the philosophy behind the investment strategy used by your managed fund’s investment manager. Investment style is the philosophy behind your investment manager’s strategy. There are four main styles – value, growth, neutral and indexed. Some styles have sub-variants and other styles are known by several terms. These investment styles can be separated […]
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Indexed investing
Indexed investment management is when the managed fund’s investment managers don’t try to beat the market but aim to match it. Indexed investment managed funds have low costs because they don’t try to beat the market but match it. The most important decision when choosing an indexed fund is which index you want to follow. […]
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ESG investing
Environmental, social and governance (ESG) or ethical investing is an investment methodology that seeks to invest in companies, properties or bonds that are aligned with the personal values of the investor. The framework for defining the ethical investment credentials of a managed fund are known as the United Nations Principles for Responsible Investment (UN PRI). […]
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