Managed funds – also known as unit trusts or collective funds – are vehicles that allow you to pool your money with a number of other investors into a single fund.
Managed funds are offered by specialist independent investment management companies such as AMP Capital, Ausbil Dexia, Australian Ethical, BT Financial Group, Hunter Hall, Perpetual Investments, Perennial Growth Management, Sustainable Asset Management and Tower Australia.
You can either invest in any of the managed super funds direct as an individual investor, (except for BT which is wholesale only) or, you’ll see that most of the industry super funds invest in the managed funds anyway – they tend to outsource the responsible investment management expertise rather than tackle it themselves.
An industry super fund may invest just in one managed fund, or, those which offer several responsible investment options, may offer you the choice of several managed fund managers depending on their particular area of expertise.
If you choose to invest in a super fund that subcontracts the fund management to a managed fund manager there may be an additional layer of charges but it will depend on the super fund chosen.
WHAT DO MANAGED FUNDS INVEST IN?
Each managed fund will focus on a different asset class but will tend to invest in one of the following categories of assets:
- Australian Shares;
- International Shares;
- Australian Shares and International Shares;
- Australian Shares and Australian Fixed Interest;
- Australian and International Shares and Fixed Interest;
- Australian Balanced – Shares, Fixed Interest, Property and Cash;
- International Balanced – International Shares, Fixed Interest, Property and Cash.
N.B. Some funds now include ‘Alternatives’ as an asset class and this will tend to include companies involved in areas such as clean technology and renewable energy, for example.
It’s simply a case of choosing where in the world and in what type of investments you want to place your money.
Risk versus reward
In helping you decide it’s always an idea to remember that putting all of your eggs in one basket is not necessarily a good thing. Spreading your savings across a variety of different investments will help to minimise the amount of risk you take. The flip side of this, of course, is that a more aggressive fund, such as a fund that invests 100% in Australian Equities, may be higher risk than a globally diversified fund but has the potential to produce higher returns over a longer time frame. The risk reward ratio is simply a matter of personal choice. Below is a list of managed super funds that offer responsible investment super options:
- Australian Ethical Superannuation
- BT Financial Group/BT Ethical Share Fund
- Hunter Hall Ethical Superannuation Fund
- Perpetual Investments/Perpetual Ethical SRI Fund
- TOWER Australia Group Ltd/Tower Ethical Growth Option
To learn more about the complexity of Managed Funds, go to ASIC’s Fido help page.
Next investment option – Industry super funds
Find out more about industry super funds.DISCLAIMER: The information provided in this website is general in nature and its brevity could lead to misrepresentation. It is not intended to be advice and could be subject to change. No responsibility can be accepted for those who act on its contents without obtaining specific advice from an adviser.