Managed funds pool the money of individual investors. The combined capital is invested by a professional fund manager, in some cases being applied across a range of asset classes such as shares, bonds, property and infrastructure assets.
Managed funds are popular with investors as they make it easy to invest. One transaction can provide access to a range of underlying investments and to diversify your investment across different asset classes and market sectors. They also provide access to investments that may otherwise be out of reach.
When you invest in a managed fund, you are allocated a number of shares or units in the fund. Each share or unit represents an equal portion of the fund’s value. You may receive regular payments – called dividends or distributions – from the fund, based on the profit or income it receives from the underlying investments.
ASX offers four types of listed managed funds:
- Listed investment companies (LICs) and trusts (LITs)
- A-REITs (Australian real estate investment trusts)
- Infrastructure funds.
- Absolute return funds.
ASX has also launched the mFund Settlement Service that enables investors to buy and sell units in selected unlisted managed funds via the same stockbroker or advisory service they might use to transact shares or other ASX products. To learn more, please visit the mFund website.
Ease of diversification
Investing in a managed fund can give you access to a diversified portfolio in one trade. You can also use managed funds to spread your risk across different asset classes.
The fund’s portfolio is managed by a professional fund manager who trades and monitors assets on your behalf, and who may conduct their own research and investigation as a part of their regular routine to assist with forming their view on investment prospects.
Access to a wide range of investments
By pooling the resources of multiple investors, managed funds enable you to access a range of investments, such as industrial property (commercial, shopping centres or office blocks) or infrastructure (toll roads, gas pipelines or airports), that may not be affordable or available to individual investors.
Security and disclosure
Listed funds must comply with ASX Listing Rules, and must disclose information on their net tangible asset backing along with any pertinent information relating to the entity in a timely manner. ASX supervises and monitors listed entities to ensure adherence to the Listing Rules.
Unlisted funds must comply with the requirements of the ASX Operating Rules. More information about mFund can be found here.