Somerset Smith Partners > Managed Funds (Listed & Unlisted)

Managed Funds (Listed & Unlisted)

Managed Funds can be both listed investments or unlisted and are often promoted to investors who are seeking to place funds with a professional manager who makes all the investment decisions for them.

Some have been successful, however, many have performed poorly due to high fees and a propensity by management to accept performance in line with markets and indices. As with most industries there are also good managers and poor managers.

Investors considering investing via managed funds (whether listed or unlisted) should assess:

  • The performance track record over as long a period as possible (5-10 years; though many funds do not have this history).
  • The strategies or management which will provide an advantage over others. This includes restrictive covenants that may limit investments styles and weightings.
  • The fees:
    1. entry / exit fees often amount to 2% to 6% of your capital (i.e. on $100,000 invested, this may be as high as $6,000).
    2. ongoing management fees of up to 1.5% of your capital invested
    3. trustee fees of up to 0.3%
    4. in addition, many investors will also be paying intermediaries a fee, which will further erode returns to investors.
  • Claims of super returns are often for a particular period (and sometimes exclude fees paid and include all income). Look for the reason for these high returns and assess the returns over a longer time frame.

Example: If a funds price is $100 and it falls 50%, it stands at $50. It then recovers and the managers hail the creditable 70% increase. However, a 70% increase means the price has only risen to $85……it would in fact need to rise 100% to recover all the lost ground to $100. (Beware of marketing!).

It is important that investors carefully assess all the issues and options available to them, before committing to this type of investment.

Contact Somerset Smith Partners for comprehensive, independent advice on Managed funds and Listed Investment Trusts – Call (06) 835 3126 

Read more about our Financial Advisers here


Where we provide any advice on this website, it has been prepared without considering your objectives, financial situation or needs. Before acting on any advice on this website, you should consider its appropriateness to your circumstances and, if a current offer document is available, read the offer document before acquiring products named on this website. You should also obtain professional advice tailored to your specific circumstances and needs prior to making any investment decisions. Past performance of any product described on this site is not a reliable indication of future performance. If you require advice on the purchase of particular investments please contact a Somerset Smith Partners adviser.

Client Portal

About Somerset Smith

"A proven record of assisting investors create and maintain wealth"

Somerset Smith Partners is an NZX firm with offices in Napier and Havelock North.

Learn more

Contact Us