What is a managed fund & how do they work?
Investing in the stock market can be a good way of storing wealth. However, most working-age adults don’t have the time to research individual companies and consistently pick winners. That’s why a lot of retail investors will generally opt for a managed fund.
These professionally managed funds have been used by investors for decades and are one of the many options Australians have to choose from from when it comes to investing in property or the stock market.
What are managed funds?
A managed fund is a big pool of investor money that is used to buy assets like stocks, bonds, cash, or even property. Whether a fund consists of one or more assets is dependent on the fund and the fund manager, so it’s always good for buyers to check they’re getting the fund that they are looking for.
Managed funds are generally made up of hundreds and even thousands of investors. In turn, the fund is usually managed by a fund manager. However, funds will vary how active or passive they are which, in turn, can affect things like fees and returns.
Advantages of managed funds
1. Diversification
One of the biggest advantages of Managed funds is that they give investors exposure to a wide range of stocks or assets that they may not have been to due to the costs. This can be useful when a long view is taken as a wide range of industries for stocks or asset types (stocks, bonds, etc.) can help grow wealth over the long term through diversification.
2. Managed by a professional
Most retail investors are just trying to preserve their long-term wealth. Generally, they can’t dedicate a lot of time to researching individual companies. So, one of the benefits of a managed fund is that an investor can essentially leverage the skills of someone experienced in investing.
2. Risk adjustment
Managed funds often offer a range of risk-adjusted portfolios. These can range from high growth but risky, balanced, and low risk with low return. This is good for individual investors as risk tolerance will vary with age and needs.
Disadvantages of managed funds
1. Larger initial investment
On the other hand, managed funds may require a large initial investment. This could be the standard $500 (similar to buying ASX shares), or it could be one set by the fund manager with some as high as $25,000. However, some managed funds have low or no minimum when investing further funds.
2. Fees
Actively managed funds will tend to have higher fees due to the administrative costs. Over the long term, fees can mean a huge difference in portfolio growth as they divert potentially invested cash away. Remember, If the managed fund is passive (i.e. fixed to an index like the s&p 500), then it will generally have lower fees. However, passive funds will move with an index, meaning that they don’t have the potential to outperform the market like an active fund can.
3. Winners and losers
Unfortunately, the nature of buying a wide range of assets means that there will be some that underperform. Part of the diversification strategy, however, is to offset those losses with some winners that do outperform.
How are managed funds and ETFs different?
Managed funds and ETFs are similar in function. What differs between the two is where they are bought and sold. Managed funds are not listed on a stock exchange and are generally bought and sold directly from the fund (usually on their website). This is why they are referred to as unlisted assets.
On the other hand, ETFs (exchange-traded funds) are usually traded on exchanges such as the ASX or the NYSE. In this sense, buying an ETF is like buying shares that own shares.
Since ETFs can be traded on an exchange through a brokerage platform, they can be easier to buy and sell for investors who already have a trading account. Plus, ASX-listed ETFs come with CHESS sponsorship (on platforms that support it), so investors get direct ownership of their stake.
Looking to start trading ETFs and shares? Check out some of the brokerage platforms in the table below.
Share account comparisons on Mozo
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Share Investing
Standard
Small trade brokerage
Monthly fee
$0.00$0.00CMC Markets Invest makes it easy to trade with a handy web and mobile platform, competitive pricing and thousands of securities. Buy Australian and US shares from $0 brokerage (T&Cs apply - see website for full details).
Share Investing
CMC Markets Invest makes it easy to trade with a handy web and mobile platform, competitive pricing and thousands of securities. Buy Australian and US shares from $0 brokerage (T&Cs apply - see website for full details).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- -
- Brokerage details
- $0 for trades up to $1,000. Greater of $11 and 0.1% for trades over $1,000.
- Settle from any bank account
- Settlement account offered
- ANZ Cash Account
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Share Investing
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Share Trading
Small trade brokerage
Monthly fee
$3.00$0.00Trade more than 22,000 shares, ETFs and options across the Australian, US and Hong Kong markets on the moomoo Australia platform. And only pay from A$3 for local CHESS-sponsored trades and US$0.99 for all US trades. Other fees apply. Earn up to 6.8% p.a. introductory rate for 30 days, applicable to up to AU$80,000 on uninvested cash, and get 10 free stocks with eligible deposits (T&Cs apply)
Share Trading
Trade more than 22,000 shares, ETFs and options across the Australian, US and Hong Kong markets on the moomoo Australia platform. And only pay from A$3 for local CHESS-sponsored trades and US$0.99 for all US trades. Other fees apply. Earn up to 6.8% p.a. introductory rate for 30 days, applicable to up to AU$80,000 on uninvested cash, and get 10 free stocks with eligible deposits (T&Cs apply)
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- Ongoing free access to real-time US market data.
- Brokerage details
- ASX trades are 0.03% the transaction amount, minimum $3.00 per order. US trades from $0.99 USD, other fees apply.
- Settle from any bank account
- Settlement account offered
- Customer funds held in segregated trust accounts with HSBC.
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- Additional regulatory pass-through fees apply for US trades. Options are available for US markets only.
Read our Mozo Review to learn more about the Share Trading
Share Trading
Small trade brokerage
Monthly fee
$7.70$0.00Buy and sell with a low $7.70 flat fee per trade and access to all ASX Shares and ETFs to invest in with GO Markets. Enjoy dedicated local customer support, a regulated Australian company for trading ASX Shares and ETFs. Plus, enjoy $0 Brokerage on your next 15 trades! (T&Cs apply).
Share Trading
Buy and sell with a low $7.70 flat fee per trade and access to all ASX Shares and ETFs to invest in with GO Markets. Enjoy dedicated local customer support, a regulated Australian company for trading ASX Shares and ETFs. Plus, enjoy $0 Brokerage on your next 15 trades! (T&Cs apply).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- -
- Brokerage details
- $7.70 brokerage for trades under $100,000, then 0.05%.
- Settle from any bank account
- Settlement account offered
- Macquarie Cash Management Account
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Share Trading
Tiger Account
Small trade brokerage
Monthly fee
$2.99$0.00Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Mozo special offer for new users only: 7% p.a. on uninvested cash balance up to AUD $100,000 for the first 30 days, with a value up to AUD $575. Plus receive US$30 NVIDIA (NVDA) fractional shares with an accumulated deposit of at least AUD $2,000 within 7 days of the first deposit. T&Cs apply – for full details, go to the Tiger Brokers website.
Tiger Account
Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Mozo special offer for new users only: 7% p.a. on uninvested cash balance up to AUD $100,000 for the first 30 days, with a value up to AUD $575. Plus receive US$30 NVIDIA (NVDA) fractional shares with an accumulated deposit of at least AUD $2,000 within 7 days of the first deposit. T&Cs apply – for full details, go to the Tiger Brokers website.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- Mozo special offer for new users only: 7% p.a. on uninvested cash balance up to $100,000 AUD for 30 days valued up to AUD $575. Plus get USD $30 NVDA fractional shares with a deposit of AUD $2,000 within 7 days of the first deposit. T&Cs apply.
- Brokerage details
- 0.03% of trade value, $2.99 minimum brokerage.
- Settle from any bank account
- Settlement account offered
- no
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Tiger Account
Share Trading
Small trade brokerage
Monthly fee
-$0.005000+ stocks and 19 exchanges all on the eToro app. Invest in ETFs with $0 commission and stocks with just US$2 per trade. Join the world’s leading social trading platform, trusted by 30+ million users worldwide.
Share Trading
5000+ stocks and 19 exchanges all on the eToro app. Invest in ETFs with $0 commission and stocks with just US$2 per trade. Join the world’s leading social trading platform, trusted by 30+ million users worldwide.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- -
- Brokerage details
- $2 USD brokerage fee for stock trades, 0.5% fee is applied to all funds paid into or taken out of the USD settlement account
- Settle from any bank account
- Settlement account offered
- Customer funds are held in a Trust Account managed by JP Morgan Chase and Co
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- $5 USD withdrawal fee applies and a $10 monthly inactivity fee is charged after 12 months with no login activity.
Read our Mozo Review to learn more about the Share Trading
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