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Benefits to Managed Funds

Apr 10, 2008
Managed funds are investment choices that have been widely reported in the news lately. Most of the news is good, but some are bad. There are news articles reporting the default of loans to lenders, but there are also magazine articles discussing currently undervalued funds. For many investors, the seemingly conflicting stories are enough of a deterrent from even entering the market.

But, managed funds really do not have to be that difficult. Basically a managed fund is one where the fund itself purchases stocks, bonds, cash securities and/or other investment options based upon their rules and the fund is then managed on a full-time basis. The manager of the fund must keep up with the market and will buy, sell or trade based upon pre-set rules.

You, as an investor can then put money into the fund. You will not own any of the investment choices on your own, but will gain or lose depending upon how well the collection as a whole does. Some advantages to managed funds include:

Having an expert take care of the fund
If you are like most investors, you do not have time to figure out what the rising Euro will do to the stock you bought yesterday. But the manager of the fund must know this type of information and will take the appropriate action. Because fund managers are usually employed by a larger financial company, such as T. Rowe Price or Fidelity, there will be accountability to the board of directors of that company.

Some funds are riskier than others, but the fund collateral should give you an idea of past performance and will also inform you about the specifics related to the fund. These specifics include:
Industry classification such as an energy fund or real estate funds
Purpose of the fund such as high-growth or high-stability
Type of investment such as blue chip fund or small company fund

It is like having a pre-built portfolio
With a managed fund, the diversified portfolio is already built for you. You can select the type of fund that has the allocation you would have implemented for yourself without having to put the time and effort into finding all the choices.

Can invest based upon your budget
You do not have to have thousands of dollars to invest. Many managed funds will allow you to give an initial investment of $50. Because you do not really own the individual stocks or bonds, you do not have to pay based upon the market. Instead, you are buying into a collection of funds and your funds just add to the total amount that is invested.

Managed funds are a great option, but even so still require some planning and research prior to investment. Find funds that are managed by well-known companies, have a proven history of success and that provide you with periodic feedback so you know how you are doing. Once you do this, you can then put all the maintenance work into the hands of the manager and concentrate on your daily life.
About the Author
Caterina Christakos is an experienced investor and instructor with World Capital Institute. Ever imagined yourself as a stock or commodities broker? Check this out: http://www.worldcapitalinstitute.com
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