As their name implies, managed funds utilise the expertise of some of the biggest and best fund managers from around the world to invest in a range of asset classes and offer clients access to a wide range of investments.
Managed funds also offer risk reduction benefits, given their focus on a number of different asset classes, the ability to include investments in smaller companies, emerging economies and private equity, and to make rapid and flexible adjustments to asset allocation.
Such investments, while potentially providing diversification, are affected by upward or downward movements in their underlying assets in the investment markets. These movements will affect both investment income and capital growth of the managed fund.
Managed funds invest in a range of asset classes (such as cash, fixed interest, property and equities) in various proportions. There are many different types of managed funds. Growth oriented (aggressive) managed funds contain a relatively high amount of equities and property, and a lower amount of fixed interest and cash securities. A conservative managed fund is likely to be less growth oriented and contain a higher amount of fixed interest and cash securities, and a lower amount of equities and property.