How_Money_Works_-_The_Facts_Visually_Explained

Managed funds

How it works

Managed funds offer a simple way for investors

to access a variety of investment markets. As well

as the advantage of having the fund managed by

investment professionals, investing via a fund is

a straightforward way of diversifying investments.

In many cases only a small initial amount of money

is required to get started and further investments

can either be made by lump sum or regular (monthly)

contributions. Managed funds are traditionally set

up as “unit trusts,” with each investor owning a

number of units (or shares).

Inexperienced or time-poor individuals often opt to invest in a

managed fund, where numerous people pool their money and

invest in a variety of markets. The fund is managed by an expert.

The fund manager distributes the

pooled money between a range of

investments, for example shares,

property, companies, and cash.

Most funds issue new units to investors

for a certain amount of time before closing.

The investors pay regular management fees

to the fund manager for their services.

FUND MANAGER

Pools investors’ money to

invest in a variety of stocks,

assets, and global regions.

INVESTOR

Buys into the fund. The number

of units they receive depends

on the unit price that day.

CASH

PROPERTY

SHARES

COMPANIES

TOTAL FUND VALUE = $

$$$$

Unit trusts

When an individual invests in a managed fund, they

are usually allocated a number of units based on the

amount they invest and the current unit price. The unit

price reflects the value of the fund’s investments and

rises, or falls, in line with those investments. Investors

realise gains from managed funds by selling units.

FOR SALE

Today’s price

1 UNIT = $

Unit = total value of

the fund liabilities

divided by total

number of units.

$

$ $ $

$ $ $

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