How to diversify your savings with managed funds

Sticking to a budget and saving money for a rainy day are important principles of effective money management. But when it comes to supporting your financial future, it’s important to diversify your savings and make your money work harder for you. Investing in a managed fund could help you grow your nest egg. They can also help you work towards a big financial goal like retirement, a wedding, your children’s education, or the trip of a lifetime.

What is a managed fund?

A managed fund is a professionally managed investment where your money is pooled together with other investors money. A fund manager then buys and sells assets (such as property, shares, cash bonds etc) on your behalf and works to maximise performance and increase returns for all investors.

The value of your investment in a managed fund can change in response to market conditions. Sometimes your investment increases in value, but it can drop in value too. However, diversification across different types of assets is an effective way to manage this risk.

“As some assets fall in value, others tend to rise and vice versa,” explains Tamera Gribben, Senior Customer and Communications Manager – Managed Funds.

How can a managed fund grow my savings?

When you invest in a managed fund, you’re diversifying your money across multiple asset classes. These include cash, fixed income assets, property, and shares. In addition, your funds can be diversified across industries, sectors and countries. This allows you to have access to certain assets that wouldn’t be available to individual investors, giving you the advantage of growth opportunities in certain markets.

What are the benefits of managed funds?

“By investing in a managed fund you’re essentially employing that fund manager to do all the hard work for you,” explains Tamera. “They’ll buy and sell assets, follow the market and manage your money to try and achieve the highest possible returns.”

Plus, you could have the opportunity to outpace inflation. When your savings are in a traditional savings account with your bank, the interest earned could be lower than the rate of inflation. This means your money is losing value year on year. In a managed fund, the value of your money has the potential to grow at the same or faster rate than inflation.

What are the risks of managed funds?

“All investments carry risk,” warns Tamera. “Even though our fund manager has a strong performance history, past performance does not indicate future performance.”

Nobody knows for certain what will happen in the future. But expert fund managers are experienced in weathering unpredictable economic forces, from recessions to pandemics. However, understanding your own risk tolerance is important when deciding whether to invest. Consider your broader financial situation, goals, liabilities, lifestyle, age and living situation before deciding whether to invest.

We have a range of managed funds to suit your investment style, goals and risk tolerance, and you can start with as little as $1,000. Find out more about our range of managed funds.