The benefits of a managed fund


The information in this article is market commentary only and reflects Lincoln's views and beliefs at the time of preparation, which are subject to change without notice. To obtain up-to-date information, please contact us.

Today’s investor has a variety of options to select from when it comes to building a share portfolio.

Depending on the amount of time you have to spend managing a portfolio, the level of involvement you are willing to contribute, or the level of comfort you have making investment choices, a managed fund may turn out to be a great choice.

Increasingly, time-poor investors and / or those preferring to outsource investment decisions are turning to managed funds.

With a managed fund:

  • Your money is pooled together with other investors and you officially become a fund investor.
  • You own a specified number of units, that represents the dollar value of your investment (less any fees and costs).
  • The fund invests in a range of assets (investment portfolio) which can include shares.
  • The investment portfolio is managed by a professional who has access to information and research that helps them determine which shares to buy and sell, along with any other assets on your behalf.
  • The fund manager makes these investment decisions based on the fund’s specified objective and strategy.

As an investor in the fund, you receive returns. The returns consist of income and capital growth. Income is derived from earnings made by the fund’s assets. Capital growth is the increase in market value of the assets held in the portfolio.

As with anything related to the share market, the value of your investment will rise or fall reflecting the value of the shares (and other assets) held within the fund’s portfolio.

Benefits of a managed fund

There are numerous benefits of a managed fund. These include:

  • Expertise – By investing in a managed fund, you have a team of professionals managing your portfolio. So your portfolio benefits from the collective information and expertise provided by the fund team and their support staff.
  • Focus – Having a managed fund keeps you aligned with your investment objective as it is the fund manager’s role is to adhere to the approach. This will be outlined in the fund’s Product Disclosure Statement (PDS). Your task, before you invest, is to ensure the fund’s objective is aligned with yours.
  • Diversification – Managed funds offer you an easy way to diversify your share portfolio, even for a smaller investment amount. This gives you the ability to gain exposure to various asset classes and market sectors, which can include a mix of Australian or international shares, property and other assets that may not normally be accessible to many individual investors.
  • Simplicity – You’ll find that investing in a managed fund means the paperwork is managed for you. Investment information, such as account balance, fund performance and transaction history, is usually very easy to access. And, fund reports can help streamline your tax information saving you loads of time and effort.

 

Important things to know about managed funds

As with all investments, managed funds can carry risks. Below are a few ways to help manage the risks.

Review the investment strategy, asset allocation and the fund manager’s track record and reputation before diving in. Remember that you’re relying on the skills of other people and don’t have control over their investment decisions.

Make sure you are aware of the type of fees in the fund, as they can eat into your profits. All managed funds charge a fee for the professional management of the fund and these can be charged in a several different ways by various fund managers. Fees can be charged as a fixed cost of the managers’ services to the fund or as a fixed percentage of the value of the fund. Some fees can also be deducted from the fund assets.

Also be wary of any hidden fees. These include exit fees if you decide to leave the fund. You don’t want to be caught out by any nasty surprises.

Always ensure that you are aware of the legal structure and read the full PDS of the fund before committing to it. There could be more parties involved in your fund that initially meets the eye. If there are, make sure you check their reputations and track records as well.

If you’re in the market for either a growth or income managed fund that believes in transparency along with outstanding performance and an unparalleled level of service, then we’d love to talk with you. The Lincoln Australian Income Fund or the Lincoln Australian Growth Fund could be just what you’re looking for.

Call us on 1300 676 333 or email us, and we’ll be in contact asap.

With a focus on capital appreciation, this managed fund invests in equally weighted Stock Doctor Star Growth Stocks. Renowned for their outstanding performance, Star Growth stocks represent a portfolio of companies with exceptional financial health and strong growth prospects.

This managed fund is designed for those seeking a reliable and dependable income stream. The portfolio has been constructed from the most financially healthy and highest yielding Australian equities, Stock Doctor Star Income Stocks and hybrid securities.

Important: Lincoln Indicators Pty Limited ABN 23 006 715 573, as Corporate Authorised Representative of Lincoln Financial Group Pty Ltd ABN 70 609 751 966, AFSL 483167. This blog may contain general financial product advice. It has been prepared without taking account of your personal circumstances (including your objectives, financial situation or needs) and you should therefore consider its appropriateness in light of your objectives, financial situation and needs, before acting on it. You should read and consider the Product Disclosure Statement (PDS), Reference Guide (RG) for the Funds and our Financial Services Guide (FSG), which sets out key information about the services we provide. These documents are available at www.lincolnindicators.com.au.