Managed funds offer investors with the skill to construct a balanced and expanded portfolio, without a huge expense in capital. This works by grouping investors together into a joint collection of capital that is managed by a trained investment team. Such a team may provide funds into any or all of the major asset groups.
While choosing a managed fund, by classification, requires less research than managing your own expanded portfolio, it is still vital that you search around for a fund that is right for you, since your money will usually perform best is investment with a long-term approach through one of these funds and controlling funds mid-term can result in considerable fees being paid.
The first thing to select is what your goals are. Are you looking for quick growth, tax-efficient asset accretion or low-risk safety through a balanced fund? Once you've assessed the level of risk that you are willing to admit in exchange for growth, you should evaluate the various individual fund managers.
Fundamentals that you should consider about are how long the fund has been established, how talented its track record looks (esp. 3 and 5-year returns), what entry fees and least balance is required. If you feel as though you may have to draw on these funds or change fund manager after just a few months or years, you should also look at how tax-competent the fund's technique of investment proves to be, and how supple it is in permitting members to draw on their funds.
Certainly, though, track-records are statistics of the past, and should be treated as such. Basically because a fund has performed remarkably well in the past, does not guarantee its future. This is where the excellence of the management team and fund flexibility becomes a vital factor.
Never judge a managed fund exclusively on past performance. Most fund managers will only publicize their best results. They may show profits over the past three years or the past six months or a six-month period a year ago. And nobody can constantly be the best performer. What you really need to look for is the regular average of, say, three years. That way you can more readily evaluate funds. But keep in mind there is no point evaluating a value fund manager with a growth fund manager. Given the nature of their philosophies, the two types seldom excel at the same time. A good fund managers sticks to its outlined values and doesn't cut and change to react to the latest economic conditions. If they are a growth manager and the market favors value managers, they shouldn't be hurrying to change their philosophy to follow the newest wave. If you spend in a number of funds or a master fund that covers both types of management mode, your profits should even out over the long term.