Colin001, Author at Managed Investment Fund https://managedinvestmentfund.co.uk/author/colin001/ Tue, 28 Dec 2021 20:29:26 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.4 214713775 Managed Investment Fund https://managedinvestmentfund.co.uk/2021/12/28/managed-investment-fund/ https://managedinvestmentfund.co.uk/2021/12/28/managed-investment-fund/#respond Tue, 28 Dec 2021 19:26:11 +0000 https://managedinvestmentfund.co.uk/?p=87 What Is a Managed Investment Fund? In a nutshell, a managed investment fund is a...

The post Managed Investment Fund appeared first on Managed Investment Fund.

]]>
What Is a Managed Investment Fund?

In a nutshell, a managed investment fund is a pool of money from several investors held with the aim of acquiring various assets. The assets can be a mutual fund, hedge fund, or exchange-traded fund. Mutual funds are the most common managed investment funds whereby investors own units. A unit is usually a share signifying the value you hold in the fund. To calculate the price of a unit, you divide the total net asset value of the fund by the shares issued.

For instance, if the fund has a net asset value of $45 million and has issued 3 million shares, each unit would be valued at $15. If you hold 1000 units in the fund – your total investment would be $15,000 ($15 x 1000 units). Basically, once the fund pools the money from different investors, the manager buys a combination of asset classes (shares, bonds, property, etc.) and manages them on your behalf to optimize the returns. The manager diversifies the portfolio, e.g., buying shares from different companies, to maximize returns while spreading risks. The process allows you to access investment opportunities that you wouldn’t have on your own.

Types of Managed Investment Funds

Usually, managed investment funds vary depending on the asset classes they invest in. For instance, signal asset managed funds invest in one asset class. This could be bonds, equity, property, or cash. Equity funds invest in shares of listed companies (local or overseas), while property funds invest in real estate. Equity and property funds are high-risk, but they offer potentially high returns. On the other hand, cash and bond funds are low-risk, translating to low returns. Generally, the funds are categorized as follows:

  • Growth funds – Growth funds constitute mainly shares and property. As expected, they can yield pretty high returns, but the risks are equally high.
  • Balanced funds – These funds carry a balanced portfolio in terms of shares, property, bonds, and cash. Usually, the portfolio presents moderate risks with modest returns.
  • Conservative funds – If you invest in a conservative fund, you should expect low but relatively stable returns since the risk is low. Usually, the portfolio consists majorly of bonds and cash with only a small percentage of shares and property.
  • Cash funds – These funds are the safest form of investment, carrying 100% cash or cash equivalents (treasury bills, bonds, money market deposits, etc.).

Things to Consider When Choosing a Fund

Every investment fund is unique in terms of management and composition. For this reason, ensure you choose one that suits your investment objectives and risk appetite. Things to consider include: The first step when selecting a fund is to check their PDS. The document discloses things such as the asset classes covered, fees charged, etc. It also highlights the risks, which vary depending on the asset class, size of the investment fund, and region. For example, if you’re risk-averse, check the document to see if the fund is low-risk. In the same way, if you want a highly liquid investment, there will be details on whether the fund allows easy redemption of units.

Long-Term Returns

Long-term returns are essential when evaluating equity and property funds. As their value tends to rise and fall quite often, relying on the recent annual analysis can be misleading. For accuracy, consider returns for about ten years to get the compound annual growth rate (CAGR)

Portfolio Management Fees

Investment funds usually charge fees to cover portfolio management and other administrative costs. This is determined as a percentage of the total AUM (assets under management), ranging between 0.10% to 1.8%.

Ensure you check the fees charged before choosing a fund to avoid future surprises. By learning about the costs, you can protect your investment by avoiding or cutting back expenses that may eat into it. Examples of such costs include establishment costs, contribution fees, management fees and costs, adviser service fees, among others.

Managed Investment Fund Returns

With more than 300 UK investment funds to choose from, it’s essential to select one that will maximize your returns. Unlike standard savings programs that increase over time, your investment can appreciate or depreciate depending on the market forces. For instance, if stocks lose value, the investment will depreciate and vice versa.

When choosing a fund, track its performance to ensure you’re not channelling your finances into a money pit. You can measure the returns on an annual basis over one year or take an annualized approach when considering several years. While annual analysis helps determine the performance within a given year, the annualized return approach evaluates the overall performance.

Also, as charges eat into the returns, it’s essential to choose a fund wisely. Even a difference of 0.5% in the fees can lead to high costs over time.

Generally, a fund that has been posting impressive performance over time may be a good indication of the fund manager’s competence in selecting optimal portfolios. Remember, sometimes poor performance is caused by unfavourable market conditions, especially for stock-concentrated portfolios. Hence, ensure you analyze the performance factoring in the prevailing economy.

Overall, work with a goal from the get-go. This way, you can measure the performance of each fund and choose one whose performance and fees align with your anticipated returns.

The post Managed Investment Fund appeared first on Managed Investment Fund.

]]>
https://managedinvestmentfund.co.uk/2021/12/28/managed-investment-fund/feed/ 0 87