Pros and Cons of Investing in Managed Funds

Managed funds are some of the most common investment products. In a managed fund, money from different investors is pooled together and is invested by a professional fund manager. There are different managed funds available depending on the types of assets that investors are seeking.

With access to investments in different asset classes, industries, companies, and sectors, managed funds allow diversification.

With a managed fund, you receive money through paid income or distributions. As with any other investment product, it’s crucial to know the benefits and disadvantages. In this article, let’s take a look at the pros and cons of managed funds:

Pros

A professional fund manager is responsible for investing your money

This makes a managed fund a low-stress way to grow your money because the fund manager should know the market and understand which investment options are suitable for you.

Managed funds enable you to diversify your portfolio

With access to investments in different asset classes, industries, companies, and sectors, managed funds allow diversification. You can invest in multiple asset classes at any given time, or just stick to a single asset class but invest across several companies and industries.

Managed funds are cost-effective

If you’re just starting to invest, having a managed fund may be a great option for you as it comes with low minimum requirements on the amount of money that can be invested.

Cons

There is no guarantee

Though your investment is handled by an expert fund manager, there’s still no guarantee that you will earn money. No matter how skilled and knowledgeable your fund manager is, they can still lose money due to factors such as a falling market.

Expect to pay fees even if you lose money

Bear in mind that you’re hiring an expert to invest your money on your behalf, so expect to pay fees whatever the result of investing is.

The dividends or capital gains or distributions are likely to be taxable

In the long run, this may make managed funds less cost-effective than they appear.

Do you have other ideas about managed investment funds? Share your insights in the comments section.

About the author  ⁄ Marxa Dillan

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