Every investor should be aware that there are many ways to achieve their financial goals.  When we assist clients with their investment options, careful consideration needs to be given to the four pillars of investment choice, including:

1. Investment Time Horizon
2. Client Risk Profile
3. Diversification
4. Liquidity

When it comes down to investing in shares or equities, the same consideration needs to be made to ensure the clients are not overexposed to one asset class or one stock/share.

Managed Funds offers the investor an opportunity to access a broad array of stocks/shares, and therefore reducing exposure to risk.  A Managed Fund also provides the Investor with an active fund of stocks, with a Fund Manager making discretionary stock choices depending on market performance and individual company performance.

In addition, the Managed Fund industry is typically a liquid environment where investors can easily sell down their funds and have fast access to their cash.

Managed Funds, however, have an underlying investment of either stocks or other fixed investments such as property, so it is important to understand that Managed Funds can still present a volatile and uneven performance history.  Particularly in the short term, Managed funds will typically mirror the overall performance of the underlying investment class.

Managed Funds investors are advised to have medium to long term time horizon.

We see the use of Managed Funds as a diversification tool, particularly for clients who may have a high exposure to the property market. We also use Managed Funds extensively for clients who are reliant on the earnings from their investments to maintain their lifestyle, particularly in times of low interest rates on term deposits and cash management accounts.  Naturally, due consideration is required to determine how much money is exposed to all relevant investment classes.