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Helpful Information on Managed Funds

What are managed funds?

A managed fund is an investment where your money is pooled together with other people’s money and is invested in a common investment goal by the fund manager. Managed funds are also known as ‘managed investments’ or ‘managed trusts’, because they are a type of trust where the fund manager holds and controls the money on your behalf.

Managed funds are either listed (traded on the share market) or unlisted (bought and sold directly through the fund manager). Listed funds are valued according to supply and demand, whereas unlisted funds are valued weekly by the fund manager.

Learn more about managed funds and how they work in this article.

How to compare managed funds

To help you compare managed funds and choose between the thousands of managed investment schemes on the market, CANSTAR releases annual star ratings reports about the different categories of managed funds.

Compare managed funds using the comparison tool at the top of this page.

In general, the main things you should consider when comparing managed funds are:

  1. Your risk profile – conservative, balanced, growth, or aggressive/high growth
  2. What type of managed fund you want to invest in – actively managed, passively managed, ethical investment, or bear funds
  3. Asset classes you want your fund to invest in – shares, cash securities, property trusts, fixed interest investments, agriculture or agribusiness schemes, film schemes, timeshare schemes, or mortgage schemes
  4. Fees and costs
  5. The withdrawal process for your exit strategy
  6. Long-term performance

Learn more about what to look for in a managed fund.

 

Written by: TJ Ryan

Managed Funds Glossary Of Terms

Please note that these are a general explanation of the meaning of terms used in relation to managed investment funds. Your provider may use different terms, and you should read your product disclosure statement carefully to understand everything that may apply to your fund. You cannot rely on these terms in relation to any managed fund you may purchase.

  1. Asset allocation: Also known as the asset mix. The way a fund distributes (allocates) your invested money into different asset classes, e.g. ‘100% cash’, or ‘20% shares, 20% bonds, and 60% property’. Assets can be allocated between growth and interest-bearing investments.
  2. Asset class: Also known as an asset sector. A group of securities that have the same characteristics. Asset classes include Australian shares, international shares, property, cash, fixed interest, and private capital investments.
  3. Balanced fund: A fund or portfolio which invests in all major asset classes: cash, fixed interest, property, and shares. This mix can include domestic and/or international assets. A balanced fund provides long-term capital growth and a reasonable level of income, and is a medium risk investment option.
  4. Benchmark: Provides a standard for measuring how a fund manager’s investment has performed long-term compared to a market index such as the All Ordinaries Accumulation Index.
  5. Bond: A type of fixed interest, debt security issued by corporations, governments or government agencies. Someone who owns bonds becomes a creditor of the bond issuer, not a shareholder in the agency.
  6. Capital: The value of an investment in a house or business, represented by total assets less total liabilities.
  7. Capital growth fund: A fund that primarily invests in assets likely to increase in value, such as shares and property.
  8. Capital guaranteed fund: A fund that guarantees a specified return (declared investment return) on top of the original capital.
  9. Contribution: An amount of money that you add to (contribute to) your investment fund. A similar concept to a deposit placed in a bank account. Some managed funds charge a fee for the administration of each contribution you make.
  10. Cost basis: The value of an investment, consisting of the amount of the original investment, any additional incremental investments, capitalised fees, and retained earnings from the investment. This valuation does not take into account any unrealised gains from market valuations.
  11. Diversified option: An option that invests in multiple asset classes (usually more than three).
  12. Growth fund:A managed fund that predominantly invests in growth assets.
  13. Hedge fund:A managed fund where the fund manager is authorised to use derivatives and borrowing with the aim of providing a higher return.
  14. Outperformance or Underperformance: How well a fund has performed, as measured against an index, competitor, or other benchmarks. Outperformance means a managed fund has performed better than the index, competitor, or benchmark. Underperformance means a managed fund has performed worse than the index, competitor, or benchmark.
  15. Securities: Written undertakings to repay money, such as bonds, bills of exchange, promissory notes or share certificates. These are usually negotiable instruments that establish ownership and payment rights.
  16. Socially Responsible Investment (SRI): A type of managed fund or investment that chooses to invest solely in companies that are acting in ways that are socially and environmentally sustainable. SRI funds are becoming popular quickly, and they typically outperform index markets. An SRI fund also has non-financial aims, including attempting to improve working conditions in developing countries, and restoring the environment.
  17. Volatility: A measurement of how much returns vary over time. The volatility of a market directly affects its level of investment risk.
  18. Wholesale fund: A managed fund where individuals pool their money to invest collectively, and distributions are made to investors pre-tax. Investors benefit from getting better diversification than they could achieve as an individual investor, and paying their own rate of tax on the income, which is usually a lower rate than the fund’s company tax rate.

Who offers managed funds for Australian and global equities?

As of our latest star ratings for managed funds, we research and rate the following managed funds:

  1. Aberdeen Asset Management Ltd
  2. Advance Asset Management Limited
  3. AIMS Fund Management Limited
  4. AMP Capital Funds Management Ltd
  5. Antares Capital Partners Ltd
  6. APN Funds Management Ltd
  7. Ausbil Investment Management Limited
  8. Australian Ethical Investment Ltd
  9. Australian Unity Property Limited
  10. Bennelong Funds Management Ltd
  11. BT Funds Management Ltd
  12. Colonial First State Investments Limited
  13. Copia Investment Partners Ltd
  14. Equity Trustees Ltd
  15. Fidante Partners Limited
  16. Fundhost Limited
  17. Hunter Hall Investment Management Ltd
  18. Invesco Australia Limited
  19. Ironbark Asset Mgmt (Fund Services) Ltd
  20. Lazard Asset Management Pacific Co
  21. Macquarie Investment Management Aus Ltd.
  22. Magellan Asset Management Limited
  23. Maple-Brown Abbott Limited
  24. MLC Investments Limited
  25. Morningstar Investment Management Australia Limite
  26. Mutual Limited
  27. Nikko Asset Management Australia Limited
  28. OnePath Funds Management Limited
  29. Pengana Capital Limited
  30. Perpetual Investment Management Ltd
  31. Peters MacGregor Capital Management
  32. Platinum Investment Management Ltd
  33. PM CAPITAL Limited
  34. Prime Value Asset Management
  35. Russell Investment Management Limited
  36. Sandhurst Trustees Limited
  37. UBS Asset Management (Australia) Ltd
  38. Vanguard Investments Australia Ltd
  39. Westpac Financial Services Limited
  40. Zurich Investment Management Limited

For more information on how CANSTAR rates managed funds, read our ratings Methodology.