When you buy stock, each share you buy represents a piece of a company’s ownership. That is, the more shares you own, the more direct ownership you have in the company. When you invest in an unlisted managed fund, however, your money is pooled with that of other investors and utilized to invest in a single asset fund or a fund that spans many asset classes.
Rather than purchasing stock in a company, you purchase units in a managed fund, which is overseen by a professional fund manager who makes investment choices for managed fund services. To put it another way, someone else is determining which investments to buy and sell, as well as when the best moment is to do so. If you’re not sure about making your own financial decisions, this could be a good option.
Diversification
You’d need to invest in a variety of industries, both domestically and abroad, to create a diversified share portfolio. This will almost certainly necessitate a considerable financial investment. However, with a managed fund, you may obtain exposure to and within a wide range of asset classes all in one place.
Transparency
When you own shares or units in an exchange-traded fund, getting the most up-to-date share or unit price is as simple as logging into your online trading platform; you may also often buy and sell them during market hours. At unlisted managed funds, on the other hand, have their value recalculated on a daily basis, and instead of looking for a buyer on the stock exchange, you can either transfer your units off-market or withdraw your investment. It could take days or weeks to finish this.
Choosing where to put your money
With a managed fund, the fund manager makes all investment choices, including when to purchase and sell. When purchasing stock, however, you will be in charge of picking which firms to invest in. You may choose to have a professional make investment decisions for you, in which case a managed fund is likely to be the best option. Investing in shares, on the other hand, is likely to be a better alternative if having greater influence over where your money is put is a deciding factor.
As previously said, a well-balanced portfolio should comprise both shares and managed funds. Because managed funds can provide a high level of diversity inside a single fund, one approach is to consider the managed fund as the core of your portfolio, with shares as a satellite.
