Investing money means that you need to take the responsibility of managing it as well. Investing it and leaving it to be is not going to work. You need to pick up a professional for money management. Investing in a managed fund means that your money will be pooled together with various other investors. Having unlisted managed funds involves a fund manager who will, on your behalf, buy and sell assets, such as bonds and shares. The underlying investments are not owned by you. The units of the funds will be owned by you. Distributions or income are also paid by some managed funds. There are various types of managed funds and when you are getting into this aspect of finance, you need to be aware of these types.
Types of managed funds
If you want to select the right fund that can meet your needs and requirements, you have to understand the risks and returns of the funds so that you can choose the right type of fund:-
- Cash funds means investing in short term and low risk investments which include short term government bonds, money market deposits, and bank bills.
- Fixed interest or bond funds means investing in investments that are low risk. These can include mortgage backed securities, bank bills, or government bonds. Some can be higher risk investments if the investment is in corporate bonds.
- In the employee share scheme, the employee receives income as long as the interest is paid by the borrower. The value of your investment doesn’t increase. If the loans cannot be repaid by borrowers, the value may decrease.
- Property funds means investing in commercial property, property developments, or residential property. Some may be high risk property funds. Within a short notice, the money can be withdrawn from the fund by you. An interest of fixed rate or return will not be guaranteed to you.
- Share equity funds means investing in listed companies. You can receive higher returns through these funds but it also comes with higher risks.
- Alternative investment funds include investing in private equity, commodities, derivatives, and the like. They involve high risk and seeking financial advice is recommended.
These are some essential tips you need to keep in mind when you are looking for unlisted managed funds so that you can manage your finances and your investments in a proper manner.