Understanding Managed Investments
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The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product. -Peter Drucker
Managed investments are funds which are coordinated by a professional financial advisor. The advisor’s responsibility is to research and then invest in a variety of stock options. Managed investments are a mixture of many types of investment vehicles including stocks, bonds, and mutual funds. The benefit of managed investments is that your money is pooled with the money of other investors. This allows for a large amount of money to be invested, creating a stronger more expansive investment portfolio. For example, New Zealand has large managed funds totaling over $50 billion dollars. There are several types of managed investments that include unit trusts, group investments, superannuation funds, and insurance bonds. Each of these investment types have their own attributes and differ on legal issues, taxes, and ownership. If you are interested in a managed investment program it is important to research each of these and make a decision based on which one fits your needs.
Unit Trusts This investment type collects money from a large group of investors and then uses that money to buy varied investments. The more people you have the better. This allows for all investors to share costs, including commission fees, which means each individual investor pays less out of their pocket for professional advising. When you invest in a Unit Trust you are actually buying unit and each unit has it’s own price. As the unit increases or decreases in value so will your investments. The type of investment is extremely popular in today’s economic market.
Group Investment Fund - This is similar to a Unit Trust because investors are joining together to create a larger buying power. They also share the cost of profession management. Most group investment funds are based in fixed interest and security type investments. In other words, group investment funds are less varied in their investment types then Unit Trusts.
Superannuation Funds This type of fund is a great way to save for retirement. An income is drawn on these investments until the date of maturity which parallels the date of the investors’ retirement. Superannuation funds are usually very conservative and low risk. Which is great for investors that want a constant and stable rate of return on their principal investment.
Insurance Bonds This type of investment is offered by a number of life insurance companies. Unlike traditional insurance policies, insurance bonds are far more flexible and work similar to Unit Trusts. Insurance bonds are used to create capital appreciation without any immediate income. Any money made is reinvested until the bond reaches maturity or the bond owner dies.
