Investing in managed funds is an efficient way for Australians to build wealth over the long term without the need for extensive market knowledge or time spent on detailed asset-level due diligence. Investors get the chance to build a diversified portfolio across various asset classes with diversified risk and potentially stable returns.
Whether for your family trust or self-managed superannuation fund (“SMSF”), , the investment funds you choose will significantly impact your financial portfolio.
This guide explains what managed investment funds are, the key factors to consider when choosing the ideal managed fund, and how to start investing in Australia.
Why Choose Managed Funds for Long-Term Growth?
Managed investment funds are professionally managed portfolios that pool money from multiple investors to invest in a mandated asset class, be it listed or unlisted equity, or debt. These funds provide an excellent opportunity for investors to gain exposure to a diversified portfolio of assets managed by professional fund managers.
They allow individuals to invest in a variety of financial instruments, including equities, bonds, property, and international markets, without having to manage the investments themselves. These funds particularly benefit those seeking a hands-off approach to growing their wealth.
How Do Managed Funds Work?
Managed funds pool money from multiple investors and invest it according to a specific strategy. Professional fund managers oversee the portfolio, making investment decisions based on market trends, economic conditions, and the fund’s objectives. Investors receive units in the fund, and their returns depend on the fund’s performance.
Managed funds with strong track records and clearly disclosed investment mandates, including the Rixon Income Fund, can deliver consistent excess returns while managing downside risk exposure. Managed by Rixon Capital, their investment team has extensive experience in high-yield private credit lending. The Fund focuses on asset-backed, senior-secured loans that has historically generate a net monthly income return of 0.92 – 1.00% for investors (or 11-12% p.a.).
Types of Managed Investment Funds in Australia
There are several types of managed funds available in Australia, including:
- Equity Funds: Invest in shares of Australian and /or international companies. These funds offer high growth potential via capital appreciation, but come with relatively higher risk and
- Fixed Income Funds: Focus on bonds and other debt instrumentsto large corporates, offering lower risk and steady returns. Ideal for conservative investors, they provide a reliable income stream.
- Balanced Funds: A mix of equities and fixed-income assets, providing a balanced risk-reward profile. They aim to achieve both growth and stability, suitable for medium-risk investors.
- Exchange-Traded Funds (ETFs): Trade on the stock exchange and offer exposure to a broad range of underlying asset classes, normally with lower fees. They are a cost-effective option for investors seeking diversification with flexibility.
Choosing the ideal managed fund depends on your financial goals and investment knowledge.
Criteria for Choosing the Ideal Managed Investment Fund
- Performance History and Track Record
A fund’s past performance strongly indicates how well it is managed. While historical returns do not guarantee future performance, funds with a consistent track record of delivering high returns relative to their benchmark are preferable.
- Management Fees and Cost Structure
Fees can eat into your returns, so it’s important to understand the cost structure. Managed funds charge fees such as:
- Management fees: A percentage of your investment, usually between 0.5% and 2% annually.
- Performance fees: Charged when the fund outperforms a benchmark.
- Entry/exit fees: Costs incurred when buying or selling fund units.
Choosing funds with reasonable fees ensures you retain more of the gain on investments.
- Risk Level and Investment Strategy
Each fund has a different risk profile. Some funds aim for aggressive growth with higher risk, while others focus on capital preservation. Understanding your risk tolerance and investment horizon is crucial when selecting the best-managed funds for beginners or experienced investors.
- Diversification and Asset Allocation
Well-diversified funds spread investments across various asset classes, reducing risk and enhancing stability. A fund’s asset allocation strategy should align with your investment objectives, whether you seek growth, income, or a balanced approach.
- Fund Manager Reputation and Experience
A fund’s success largely depends on the expertise of its management team. Experienced fund managers with a strong track record of navigating different market conditions are more likely to deliver consistent returns.
How to Invest in Managed Funds in Australia
- Setting Your Investment Goals
Before investing, define your financial goals. Are you looking for capital growth, income generation, or wealth preservation? Your objectives will determine the type of fund that best suits your needs.
- Choosing a Fund That Matches Your Risk Appetite
Assess your risk tolerance before selecting a fund. If you prefer stability and steady growth, fixed income or balanced funds may be ideal. If you want higher returns and can tolerate market fluctuations, a listed equity fund may be a suitable option. It’s important to choose a fund that aligns with your financial goals and investment timeline.
Conclusion
Choosing the ideal managed fund requires careful evaluation of performance history, fees, risk level, diversification, and fund manager expertise. Whether you’re a beginner or an experienced investor, selecting a well-managed investment fund that aligns with your financial goals is crucial for long-term success.
Rixon Capital offers a trusted investment solution for Australian investors seeking consistent high-yield returns via a unique private credit strategy that is focused upon capital preservation. With a strong track record in secured private credit lending, they provide stable and attractive returns. Investors benefit from a well-structured, institutional-grade investment strategy that prioritises capital preservation and consistent monthly returns.
To grow your wealth with confidence with Rixon Income Fund, contact us today.
