A managed investment is an account held by a money manager. Investors contribute funds to the managed fund, and the money manager uses those funds to buy investments on behalf of all the investors. The investments bought may include shares, bonds, equities or listed property but the ownership of the assets stays in the investor’s name. Managed funds are a type of unit trust and offer investors the opportunity to diversify their investment portfolio through the purchase of various asset classes.
A well-diversified investment portfolio can help reduce the risk of investing by balancing the returns and risks from different types of assets. Historically, managed investing has also generated better returns than DIY (do-it-yourself) investing.
However, switching to a managed investment account is not without its challenges. Many individuals struggle with a range of factors when deciding to switch, particularly those who have invested in a self-directed manner for a long time. It’s important to remember that the benefits of a managed account are often associated with higher fees, which can offset the potential for higher returns.
Before moving to a managed account, it’s important to assess your financial situation and determine the value of any potential gains. For example, it’s crucial to understand your investment goals and risk appetite so that your wealth manager can make a recommendation that best suits your needs. A good quality wealth manager will take these factors into consideration and provide you with a detailed and tailored plan.
Another key factor to consider is your current investment strategy. If you’re still in the early stages of your wealth accumulation journey, then a DIY approach might be more appropriate as it can take some time to grow your investment portfolio. This can be especially true for those who invest in a high-risk portfolio, as a significant return on your capital could take some time to materialise.
A managed account can help streamline your investment portfolio by bringing together all the accounts you hold under one roof, making it easier to execute a consolidated and cohesive wealth management plan. However, this can be expensive and it is important to consider this when comparing a managed account against a DIY approach.
There are a variety of fees associated with managed investments, including contribution fees, management fees and performance fees. These are deducted from your investment balance on a regular basis. Some managed investments also charge a fee for withdrawals, transactions and changes to investment options within the scheme. It’s important to understand these charges and how they affect your overall return, as small differences in fees can have a substantial impact on your returns. In addition, some managed investments invest in other managed investments, which can entail additional fees that aren’t associated with your individual investment account. Managed investing