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Investing in Shares

Managed Funds – Benefits And Why They Are So Popular!

Around 1.2 million Australians have discovered the benefits of managed investments – one of Australia’s most popular investment categories.*

What is a managed fund?
A managed fund is a professionally managed investment portfolio that individual investors can buy into with as little as $1000.

A managed fund pools you money with money from other investors to form an investment fund.  Specialist investment managers then invest the money in the fund on your behalf.

When you invest in a managed fund, you are purchasing ‘units’ rather than shares and are allocated a number of ‘units’.  The value of your units is calculated on a daily basis, changing as the market value of the assets in the fund rises and falls.

Managed funds can be used to invest a single lump sum or by investing smaller regular amounts as part of a regular investment plan to reach your short, medium or long-term goals.

So whether you have $1000, $20,000 or $200,000 to invest or are investing smaller regular amounts as part of a regular investment plan, your money has access to the investment buying power of millions of dollars.

The benefits of managed funds

1. Diversification
Managed funds enable you to invest in a diversified portfolio of investments beyond what most investors could achieve themselves. With as little as a few thousand dollars you can gain an interest in as many as 50, 100 or even 1,000 investments held by the fund. These investments may be spread across single or multiple asset classes, reducing the volatility of the overall investment and the impact of a fall in the value of any one asset.

2. Cost
Managing your own investments can be costly. Managing your own diversified portfolio of shares, property, fixed interest and cash is likely to involve research costs, transaction charges, professional fees (accountants, stockbrokers etc) and, in the case of direct property, upkeep. In contrast, managed funds generally involve an initial charge of between 0% to 4% of your investment, with an annual management fee based on your account balance.

3. Performance
Managed funds may offer the potential to earn returns above the market benchmark of each respective asset class. With a team of professional investment managers constantly looking for profitable opportunities, a fund can offer investors the potential to earn returns in excess of what they might be able to achieve on their own.

4. Time saving
Wisely managing a diversified portfolio of investments is time consuming. You need to research the market, implement transactions and consult with stockbrokers, accountants, tax specialists etc. A fund manager can undertake all the necessary management tasks on your behalf.

5. Professional management
A managed fund gives you access to the resources and knowledge of investment specialists who constantly research and monitor investment markets to find the best opportunities.

6. Convenience and efficiency
Managed funds handle all the administration and paperwork for you, providing regular statements on the fund’s performance and annual tax statements for your tax return.

7. Scale
As managed funds pool investors’ money they typically have the buying power of millions of dollars. This allows them to take advantage of investment opportunities that are not generally available to individual investors.

8. Access to all major asset classes
Would you know how to buy a government bond or trade in international shares? Could you afford to buy a shopping centre or an office tower? A managed fund provides you with easy access to all these investment opportunities and more.

Why are managed funds so popular?
Many of my clients are invested in managed funds and are very happy with their investments.  The main reasons why clients are so satisfied with them, and why they have become so popular are because:

• It is easy to diversify your investments,
• Experts manage your money,
• It is easy to reinvest your investment earnings,
• It is easy to set up a regular investment plan,
• You can invest for income, growth or both, and
• You can start investing with as little as $1000.

Borrowing to invest
A faster way to grow your investment portfolio is by borrowing funds to invest or gearing.  Borrowing to invest is a strategy that can help increase the size of your investment portfolio and potentially magnify your investment returns.  Remember that gearing potentially amplifies your gains as well as you losses, therefore you need to seek professional advice before implementing a gearing based strategy.

What does Baggetta & Co have to offer?
At the end of 2005, Australia had a grand total of 360 fund managers and around 30,000 different managed funds.**  No wonder choosing a fund can be so confusing.

But with a bit of help it can be simpler than it first appears.  If you have been looking for an affordable way to get into investments and savings to create wealth and plan for your retirement, and would like further information about managed funds to determine whether they are a suitable investment for you, then speak with to your Financial Adviser, or give me a call.  I am happy to offer you a no cost, no obligation, ½ hour consultation to discuss your needs and objectives and to determine whether managed funds, or borrowing to invest, is a suitable strategy for you.

Call me on 9317 7300 for further information in relation to these matters, or for a free consultation.

Paul Baggetta

* Information based on Roy Morgan Research March 2006 showing all managed fund investments in Australia, not including superannuation.

** Figures used from Rainmaker research April 2006.


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The information provided on this website, including the material and contents provided in the website publications, are informative in nature only and you should not act specifically on the basis of this information alone. It should not be used as a substitute for legal, business, accounting, tax, financial planning or other professional advice. If expert assistance is required, professional advice should be obtained. Liability limited by a scheme approved under Professional Standards Legislation

Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.