Anthony Keane - News Limited

• Managed funds pool investors money to invest
• Good for people who lack time, confidence
• Keep an eye on fees

MANAGED funds can be a good investment option for people without the time or confidence to invest directly into assets.

But with more than 11,000 funds available to Australians, how do you choose the right one for you?

Managed funds pool people’s money together to invest in asset classes including shares, property, commodities, and infrastructure.

For a small amount say $2000 people can gain exposure to a range of assets they could not afford to access on their own.

AMP financial planner Mark Borg says the usual investing principles apply: Diversification, knowing your investment timeframe and understanding how your money is being invested.

“Managed funds are made up of people. You are employing someone to manage your money,” Mr Borg says.

“It’s a financial planner’s job to be fully aware of the people and practices behind the funds.”

He says investors should also be aware that managed funds can freeze your money and refuse redemptions, as has happened with mortgage funds during the recent global financial crisis.

Research group Morningstar says 439 Australian managed funds were launched last year.

Communications chief Phillip Gray says fees and charges are a key issue.

“The spread of fees and charges for Australian share funds, for example, ranges from less than 1 per cent a year for index-tracking funds to nearly 4 per cent for the more adventurous, ’boutique’ options,” Mr Gray says.

“While you can’t control how investment markets behave, you can control how much you’re paying in costs to get exposure to markets.”