What are managed funds?

A managed fund is an investment vehicle, which groups of individuals invest money, towards the purchase of a pool of investments, where investors do not have day to day control over the investment. The beneficial interest in the assets is divided into units that are issued to each investor. Each unit is equal to another in terms of its rights and entitlements.

What is the difference between wholesale and retail managed funds?

Retail managed funds are designed to cater for individual investors with minimum investment amounts ranging from A$1,000, with some offering regular savings plan options.

Wholesale managed funds are designed to cater for professional investors with significantly higher minimum investment amounts, typically in excess of A$100,000 per fund. However, investing via Masterfunds and Wrap Platforms can reduce this range to a few thousand dollars.

Management Fees

Cost to the investor comprises the Management Fee, the Trustee Fee, Expenses and the wholesale investment management cost of the underlying investment products selected by the investor.

The fees charged by a wholesale fund are usually lower then a retail fund, however the investment strategy applied by a manager to retail and wholesale fund may be the same.

Entry or exit fees on the average retail unit trust range up to 5%, annual management fees up to 3% from which a trailing/ongoing commission ranging from 0.25% to 0.80% is paid. Annual management fees charged by wholesale fund managers are approximately half that of the fees charged by retail funds.

Expenses

Retail products tend to have an amount set to cover expenses such as prospectus and investor communication costs. These costs tend to be minimal in the case of wholesale products. The difference in this charge would tend to be in the order of 0.2% - 0.5%.

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