ASX Managed Funds
What is an ASX managed fund ETF?
An managed fund is a pool of investors' money, which is invested by a professional. For example, 1,000 investors invest $10,000 each into a special bank account and get 10,000 "units" in return. That is, $1 might buy you 1 unit.
Once the money is in the fund, the professional fund manager (which may be an individual, a group of analysts or an entire company, will invest that money. If the investments do well the unit price will increase.
If you had invested $10,000 and the 'unit price' (which is normally published on the fund manager's website) went up 10% (to $1.10 each), your original investment is now worth $11,000 (10% more). You could sell your units (also called a withdrawal or 'redemption') and take your cash.
What Is An ASX Managed Fund ETF?
The major difference between a normal unlisted 'managed fund' and an ASX-listed managed fund is how you get your money in-and-out of the fund.
An Exchange Traded Managed Fund (ETMF) or Active ETF is simply a managed fund which is listed on the stock exchange. The ASX categorises these differently to let you know that they might use a more active strategy than a normal index fund.
Basically, ASX managed funds use an ETF 'wrapper'.
Having a managed fund available on the ASX makes it easy to invest because all you need to do is click "buy" or "sell" in your share brokerage account.
Are Managed Funds The Same As Index Funds, ETFs, Rules-Based ETFs and Hedge Funds?
Index funds, hedge funds, ETFs and Rules-Based ETFs are types of managed funds. Click the links below to learn more.
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