Tutorial 4 - Managed Funds - Managed Funds There are two...

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Managed Funds There are two variations of managed funds: 1. Managed investment schemes 2. superannuation These two alternatives differ by their taxation and conditions of release. The parties involved in managed funds are: 1. unit holders – they provide finance to the fund. They are the owners and beneficiaries of the fund. 2. investment company – hires the fund manager and establishes the trust 3. Fund manager – invest on behalf of the unit holders 4. Trustee – legal owners of the assets and safeguard the assets. They do not engage in investment activities. Different types of managed funds: There are two classifications of investment management schemes: 1. Active Purpose: Beat the market to obtain an abnormal return Fee: Higher Investment strategy: asset allocation, market timing, industry timing and stock selection Performance: empirical research finds that an active fund may not outperform the index fund once taking into the higher fee.
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