A managed fund investment is a popular choice for individuals seeking exposure to a diversified portfolio of assets without the need to actively manage each position. These funds pool money from multiple investors to create a large capital base, which professional fund managers then invest across various assets, including stocks, bonds, international shares, and other securities. Managed funds are particularly appealing because they offer investors a way to access assets and strategies they might not be able to engage with individually.
How Managed Funds Work
Managed funds operate under a clear structure: each investor purchases units within the fund, giving them proportional ownership in the underlying assets. Professional fund managers oversee the investments, making strategic decisions to align with the fund’s objectives—whether that’s growth, income, or a mix of both. The fund’s performance, in turn, depends on how well these assets perform collectively. Managed funds often target specific investment goals or themes, such as Australian ethical investment funds, international stocks, or ASX stocks, allowing investors to choose a fund aligned with their values or financial objectives.
Types of Managed Funds
Managed funds vary widely in their strategies and approaches, but they generally fall into two main categories: active and passive.
- Active Funds: In active funds, fund managers make frequent decisions to buy or sell assets, aiming to outperform specific market benchmarks. They analyse market trends, company performance, and economic indicators to capitalise on growth opportunities.
- Passive Funds: Passive funds, on the other hand, aim to replicate the performance of a particular index, like the ASX 200. Rather than aiming to beat the market, these funds seek to match its performance, often with lower fees due to minimal trading.
Other managed fund types include ethical investment funds, which adhere to responsible investing principles, and index funds, which passively track a market index.
Benefits of Investing in Managed Funds
Managed funds provide several key benefits, making them an attractive option for a broad range of investors.
Diversification
By pooling assets, managed funds can spread investments across multiple sectors, geographies, and asset classes, reducing exposure to individual asset risk. For instance, a managed investment fund may include a mix of ASX stocks, international shares, and bonds, providing a balance that can help stabilise returns.
Expert Management
Managed funds are overseen by professionals who have experience navigating complex markets. This expertise can be invaluable, particularly for investors who lack the time or knowledge to manage their portfolios.
Accessibility
Managed funds require a lower minimum investment than some other asset classes, making them accessible to retail investors looking to benefit from a diversified portfolio. With options like trust funds and retirement-focused managed funds, investors have choices that align with their financial stages and goals.
Risks to Consider
Like any investment, managed funds come with risks. Key risks include:
- Market Risk: Since managed funds invest in market-linked assets, they are susceptible to fluctuations in asset values. For example, a downturn in international stocks or ASX stocks can affect the fund’s value.
- Liquidity Risk: Some managed funds invest in assets that are not easily sold, such as real estate, which may impact fund liquidity.
- Manager Risk: The performance of actively managed funds depends on the fund manager’s skill. Poor decisions or underperformance can affect returns.
At Defender AM, we take a proactive approach to managing risks, with an emphasis on diversifying investments and conducting rigorous due diligence to help protect our clients’ investments. Our managed funds are structured with risk management strategies that balance growth potential with investor security.
Is a Managed Fund Right for You?
Choosing a managed fund should align with your personal financial goals, risk tolerance, and investment time frame. If you’re new to investing, managed funds can be a practical entry point, offering both diversification and professional management without requiring in-depth financial knowledge. For seasoned investors, managed funds provide the convenience of diversification across a range of markets, from Australian ethical investments to international stocks.
Factors such as your income goals, retirement timeline, and preference for active versus passive management can help determine the right type of fund for you. Additionally, consider whether you prefer a fund aligned with ethical or sustainable investing principles or one with a specific growth focus, like an ASX stock-focused managed fund.
Why Choose Defender AM as Your Managed Fund Provider
Defender AM offers a range of managed investment funds in Australia designed to meet diverse financial goals and preferences. With a focus on disciplined risk management, Defender AM stands out for its robust strategies and commitment to delivering strong performance over time.
One of our core offerings is the Defender Credit Fund, which targets income and stability for investors seeking a reliable managed investment. Designed with careful attention to the balance between risk and return, this fund is particularly appealing to those looking to safeguard capital while benefiting from strategic opportunities in the credit market.
Beyond the Defender Credit Fund, Defender AM’s suite of investment options spans multiple asset classes, including international shares and Australian ethical investment funds, providing clients with customised solutions to fit their unique needs. Whether you’re looking to plan for retirement, build wealth, or invest with an ethical focus, Defender AM brings a personalized approach that aligns with your financial journey.
Getting Started with Managed Funds
For investors interested in managed funds, starting is straightforward. Begin by evaluating your investment goals, risk tolerance, and desired level of involvement in managing your portfolio. With a clear sense of what you’re looking for, you can identify a managed fund that fits your needs.
Defender AM simplifies the investment process, offering resources and support to help investors make informed choices. Our team of experts is available to discuss how our managed funds—whether focusing on income, growth, or ethical investments—can support your financial objectives. Visit our website or reach out to our team to explore your options and find the right Defender AM fund to achieve your investment goals.
Managed funds represent a powerful tool for building a diversified and professionally managed portfolio. By choosing a reputable provider like Defender AM, you can make confident strides towards your financial future with the backing of expert insight and carefully crafted investment strategies.
