How to Assess Your Managed Funds & Choose Your Next One
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Investing in managed funds can be a complex journey for many individuals. In our recent webinar, we unravelled the intricacies of assessing your current managed fund and making informed choices for future investments. The session was packed with insightful discussions and an engaging Q&A round with our audience. Here are the key takeaways.
Understanding the Current Landscape
Industry data reveals a surprising trend: 74% of funds return less than the industry standard benchmark, with an average underperformance of -2.53%. Furthermore, these underperforming funds charge an average fee of 1.54%, eating into investors' returns. You can use our Compare Your Fund tool to assess your own fund's performance.
Unveiling the Causes
The underwhelming performance of many managed funds can be attributed to high fees, career risk among fund managers, and the challenges of managing larger funds. These elements create a disadvantage that often leads to average returns.
Navigating Underperformance
If you find yourself with an underperforming fund, don't panic. Check your Capital Gains Tax (CGT) position before contemplating a switch. Look for comparable options in the same asset class and compare the fees. Switching or allocating new funds to a better-performing fund could be beneficial. You can view our managed funds on the InvestSMART Portfolios page.
Choosing a New Fund
When choosing a new fund, avoid the temptation of past performance. Instead, focus on costs. Diversifying your portfolio by allocating to global and ASX small-cap funds can be a smart move. Learn more about investing fundamentals in our InvestSMART Bootcamp or sign up your team for the InvestSMART Bootcamp for Business.
The Role of Managed Funds
Managed funds offer unique benefits, especially when it comes to gaining exposure to illiquid markets and assets, an area often overlooked by ETFs.
Assessing a New Fund
Consider multiple factors when selecting a new fund, including asset class, fees, size/liquidity, performance, location, and tax implications. Aiming to be average can lead to outperformance, as most professional investors can be outdone by focusing on fees and getting the index return. Remember, at InvestSMART, we offer Capped Fees.
Q&A Session Highlights
Our audience posed several insightful questions during the webinar. For more answers to your queries, visit our Help Centre.
Why Choose InvestSMART?
Join InvestSMART on a journey to financial clarity. With our diversified, capped-fee professionally managed accounts and a comprehensive Bootcamp to learn investing basics, we make navigating the world of managed funds easier. We're committed to transparency and accessibility in investing. To discover how we can help you achieve your financial goals, schedule a call with our team today.
Frequently Asked Questions about this Article…
Managed funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of assets. They offer unique benefits, such as gaining exposure to illiquid markets and assets, which are often overlooked by ETFs. Managed funds can be a great way to diversify your investment portfolio.
To assess your managed fund's performance, you can use tools like the Compare Your Fund tool to see how it stacks up against industry benchmarks. It's important to consider factors like fees, asset class, and performance relative to the benchmark.
Many managed funds underperform due to high fees, career risk among fund managers, and the challenges of managing larger funds. These factors can create a disadvantage, leading to average or below-average returns.
If your managed fund is underperforming, don't panic. First, check your Capital Gains Tax (CGT) position before making any changes. Consider switching to a better-performing fund in the same asset class or reallocating new funds to improve your portfolio's performance.
When choosing a new managed fund, focus on factors like costs, asset class, fees, size/liquidity, performance, location, and tax implications. Avoid relying solely on past performance and consider diversifying your portfolio with global and ASX small-cap funds.
InvestSMART offers diversified, capped-fee professionally managed accounts, making it easier to navigate the world of managed funds. With a focus on transparency and accessibility, InvestSMART provides tools and resources to help you achieve your financial goals.
You can learn more about investing fundamentals by participating in the InvestSMART Bootcamp, which offers comprehensive training on the basics of investing. It's a great resource for both individuals and teams looking to enhance their investment knowledge.
For more answers to your questions about managed funds, you can visit the InvestSMART Help Centre. It provides a wealth of information and resources to help you make informed investment decisions.
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