Invest in a Managed Fund
There are a variety of options available for you to invest your money and grow your retirement funds or your wealth.
Stocks, bonds, bank accounts, property, or commodities (such as gold, silver or rice) are all viable investment possibilities, but keeping track of and trading in all these asset classes is a major investment of your time and money.
A managed fund makes it easy to trade assets and take advantage of market movements to grow your investments. Managed funds buy and sell stocks and other investment tools that, depending on the fund’s goals, may be done so passively or aggressively. They’re a popular investment option for investors that don’t have the time, know-how, or desire to actively manage their own money.
Whether you’re new to investing or you’re looking to explore your investment options, managed funds can be a useful addition to a diversified portfolio. Learn what managed funds are, how they work, and what they can do for you. Discover opportunities to invest in a managed fund in NZ for capital growth or regular income with MyFuture.
What Is A Managed Fund?
A managed fund is a popular investment product that allows investors to take a hands off approach to investment decisions so they can spend more time doing the things they enjoy or prioritise. By investing in a range of different assets, managed funds provide a way for investors to have a diversified portfolio that is professionally managed without day to day monitoring or inputs.
Managed funds pool together the money from all the investors that buy in and use that pooled fund to invest in various investment instruments. While these instruments can invest in stocks, they also may invest in a combination of other assets that include bonds, property, collectibles, or anything that’s traded on open markets.
A managed fund can be an excellent investment choice for anyone looking to take advantage of the knowledge and expertise of professional fund managers. The growth of your investment is dependent on the industry, the strategies, and the market value of the assets your managed fund invests in. An Exchange Traded Fund (ETF) is one type of managed fund that attempts to reflect the changes in value of a stock index by owning shares in a selection of the individual companies that make up the index. Other managed funds may have more active investing strategies or invest in non-share assets.
How Do Managed Funds Work?
As an investment product that has a specified goal, industry, or strategy, managed funds are an excellent option for people who know their financial goals. By establishing its own goals, a managed fund’s manager bases their investment decisions on the guidelines they’ve set for themselves to reach or exceed specific goals. In order to do so, they buy and sell specific assets based on their research and the market performance of the owned assets in the managed fund.
Managed funds can certainly make your life easier. By entrusting the day to day management of your investment to professionals who are tasked with adhering to an investment strategy, you can rest easy knowing that your money is in a position to make money and is invested according to your principles.
Funds identified by level of risk (and reward)
A managed fund may be actively or passively managed. An actively managed fund is one where the fund managers make regular trades, either buying or selling, in order to achieve the fund’s stated goals. On the other hand, a passively managed fund is one where the fund managers make relatively few trades, instead purchasing and owning assets that adhere to the fund’s goals, such as an ETF or a more traditional index fund.
Beyond being actively or passively managed, funds also have characteristics that define the strategies of the fund managers. Funds can be conservative, focused on safe and sustained growth; or they can be aggressive, making higher risk investments that offer higher potential returns. There are also funds that are focused on ethical, socially responsible or ‘green’ investing.
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What Are The Benefits Of Managed Funds?
Managed funds are an excellent way to invest without having to stay on top of your investment’s health on a regular basis. They also offer you the ability to diversify your portfolio, potentially lower your transaction costs, and allow you flexibility in your investment choices.
Diversification
By purchasing a single unit of a managed fund, you are in reality gaining ownership in shares of several companies and asset types that make up the fund’s holdings. Owning managed fund shares is inherently diversified, meaning your portfolio is relatively protected from the market influences on individual asset types or industries.
Lower Costs
Since fund managers handle the transactions to enable your managed fund to buy or sell assets, you don’t have individual transaction costs. This also means you don’t have to spend time on investment research or day to day monitoring which have associated costs themselves. Managed funds will charge a maintenance fee which is usually relative to the level of activity of the fund managers and the risks inherent in the industry or investment type. You pay for their services and their time.
Flexibility
Managed funds are easy to buy and sell if you decide to shift your investments or cash out. If you’d like to increase your ownership of a managed fund, it’s as easy as making the decision to, and MyFuture will take care of the rest.
What Are The Risks Of Managed Funds?
Buying or owning managed fund units has inherent risks, just like any investment product. As we’ve noted, a managed fund is managed according to the strategy and principles they advertise for that product, with all the risks and rewards that those strategies offer. Therefore, managed fund ownership does not protect against inflation or losses. Managed funds may also be bought and sold at discounts or premiums which do not necessarily reflect the underlying value of the assets.
As with any investment decision, owning a managed fund should be a part of a considered and intentional investment strategy with diversified assets. If you think managed funds would be a useful addition to your investments, get in touch with the team of Qualified Financial Advisers at MyFuture to discuss your financial goals and how managed funds might play an important role in your long-term financial strategy.
What is our 6-Step Financial Advice Process?
The 6-step financial advice process is the international benchmark for financial planning. This holistic approach is proven to increase the likelihood of you achieving your financial goals.
Discovery Session
This is our opportunity to get to know you better, understand your financial goals (short, medium and long-term), and what resources you have to achieve those goals.
Research & Recommendations
During these steps, we do the research, run the numbers, document and present our recommendations to you. This can be a comprehensive financial plan focused on long-term wealth creation and/or a statement of advice focused on your more immediate financial needs. We will need to verify the information you provided during the Discovery Session by requesting supporting documents such as loan and savings account balances, payslips, etc. This ensures we are using highly accurate information when developing our recommendations.
Implementation
This step is all about implementing the recommendations. We don’t just provide the recommendation; we take responsibility for helping you implement it. This could involve helping you to complete application forms, working with a broker to restructure your lending, or finding you suitable investments. We understand you’re busy, so our goal is to make your financial world as easy as possible by doing as much as we can in-house for you. However, ultimately, we never have access to your money and cannot sign anything on your behalf, so you need to be an active, willing, and ideally enthusiastic participant in this process.
Ongoing Service & Reviews
This is where the real fun begins—managing and tracking your long-term financial success. We have periodic reviews to ensure your strategy is still appropriate if your goals or circumstances have changed. We adjust when necessary and provide annual snapshots so you can see your progress over time. Most importantly, you have your very own trusted Personal Financial Adviser available anytime to help with the little or big stuff. Worried about making next month’s mortgage repayments? Call us. Your parents gave you an early inheritance? Call us. Broke up with your partner and split all your assets? Call us! We’re here for you every step of the way to ensure that whatever life throws at you, you stay on track with your long-term financial goals.
Frequently Asked Questions