What Are Managed Funds?

Managed funds come in all shapes and sizes, catering to a range of risk appetites and financial goals. Whether you’re after funds that involve active, hands-on management or prefer a more laid-back, set-and-forget approach, there’s likely an option for you.

Actively Managed Funds

The crux of actively managed funds lies in their pursuit of outperformance. The fund managers of these types of funds play an active role in trying to generate returns that outshine a specific benchmark, such as the S&P/ASX 200 in Australia.

Fund managers use a variety of strategies, methods, and analyses to make their investment decisions. They closely monitor market trends, economic data, company fundamentals, and other factors to identify buying and selling opportunities. However, the higher potential returns offered by actively managed funds often come with higher fees.

Passively Managed Funds

Passively managed funds, often called index funds, contrast with their active counterparts by aiming to replicate, rather than beat, a specific market index. An index is a snapshot of a particular financial market segment, such as the S&P/ASX 200. As the fund is not trying to pick winners over losers, there are generally lower fees due to the less intense management requirements. You can read more in our guide to index funds in Australia.

Unlisted Trusts

Unlisted or unlisted managed funds are a unique type of managed fund not listed or traded on a public securities exchange such as the ASX. Instead, they are typically available for investment directly from the fund manager.

You can find balanced or specialised funds within each type of fund.

Specialised Funds: These funds focus on specific sectors or investment strategies. They might zero in on industries like technology or healthcare, regions like emerging markets, sectors such as commercial property or ethical investments that align with certain values. You can consider them laser-focused funds, looking at one part of the investment universe.

Balanced Funds: These are your all-rounders. They aim for a balanced mix of asset types like shares, bonds, and property to spread risk and achieve stable returns.