Managed funds, as the name suggests, are an investment structure where professional fund managers select and manage the fund’s investments on behalf of their investors.
Managed funds have long appealed to people who may not have the time, inclination or expertise to invest in certain asset classes on their own behalf. And as investors pool their money, managed funds also give them access to a wider range of assets and asset classes than their financial resources might otherwise give them access to.
Traditionally, managed funds were ‘unlisted’ which meant units in the fund could only be purchased by applying to the fund. These days, many are listed on the ASX mFunds service so units can be bought and sold through a broker. (ASX mFunds are not to be confused with exchange-traded funds (ETFs), although many fund managers also offer ETFs.)
Importantly, fund managers will deduct management fees (and often performance-based fees) from fund earnings before distributing income.
Today there are thousands of managed funds in Australia, although they are losing some ground to ETFs. They are held by a range of investors, including super funds, insurance companies, SMSFs and personal investors. The size and maturity of the managed funds industry means there is a wide variety of investment strategies on offer.
Some managed funds invest in a single asset class such as shares or fixed interest, a geographical area such as Asia, or emerging markets. Others focus on a strategy such as high-yield shares or a theme such as sustainability. So-called multisector funds invest across multiple asset classes.
Some fund managers actively select and trade investments to try and beat the market, while passive or index funds aim to track a particular market or market index. Generally, the higher the degree of active management the higher the fees.
How are SMSFs using managed funds?
It is often claimed that SMSFs are not as diversified as large super funds, with too much focus on Australian shares and cash and not enough exposure to international markets. But that view fails to recognise indirect investment by SMSFs via managed funds.
At first glance, the latest figures from Class as of 30 June 2023 show just 10% of SMSFs hold direct international shares. But dig a little deeper and 32.7% of SMSFs hold investments in traditional managed funds (representing 13% of total SMSF assets) and a similar number have money in ETFs. What’s more, more than half of the 20 most popular managed funds invest in global shares, bonds or infrastructure.
The 20 most popular managed funds invested in by SMSFs
The top 20 list of managed funds is ranked by the percentage of SMSFs that hold these funds, rather than the value of assets that SMSFs have invested in the funds, although both figures are provided in our table.
Platinum’s International Fund tops the list in terms of SMSFs holding the fund and the percentage of total SMSF managed fund investments. As a mark of the wide choice of fund managers in the market, Platinum is one of only four fund managers to have two funds listed in the top 20, alongside stalwarts PIMCO, Magellan and Vanguard. Ten fund managers have just one fund listed.
Australian shares and listed property funds are represented by managers such as Fidelity, Bennelong and Vanguard.
As global interest rates continue to rise sharply, investors are using managed funds to gain exposure to global bonds, fixed interest and diversified income funds from managers including bond specialist PIMCO, Bentham and Macquarie.
20 most popular managed funds invested in by SMSFs
| Rank | Security code | Fund name | % of SMSFs with managed funds that hold this security | % of total SMSF managed fund investments* |
|---|---|---|---|---|
| 1 | PLA002AU | Platinum International Fund | 10.9% | 1.70% |
| 2 | HOW0098AU | Ardea Real Outcome Fund | 10.0% | 1.1% |
| 3 | IOF0145AU | Janus Henderson Tactical Income Fund | 9.0% | 1.1% |
| 4 | ETL0018AU | PIMCO Global Bond Fund – Wholesale Class | 8.8% | 0.8% |
| 5 | MGE0001AU | Magellan Global Fund | 8.5% | 1.1% |
| 6 | ETL0276AU | Partners Group Global Value Wholesale | 6.9% | 1.2% |
| 7 | CSA0038AU | Bentham Global Income Fund | 6.1% | 0.6% |
| 8 | FID0008AU | Fidelity Australian Equities Fund | 5.9% | 0.9% |
| 9 | MAQ0277AU | Macquarie Income Opportunities Fund | 5.8% | 0.6% |
| 10 | BFL0004AU | Bennelong ex-20 Australian Equities Fund | 5.8% | 0.5% |
| 11 | MGE0002AU | Magellan Infrastructure Fund | 5.4% | 0.5% |
| 12 | ETL0071AU | T. Rowe Price Global Equity | 5.3% | 0.7% |
| 13 | PLA0004AU | Platinum Asia Fund | 5.1% | 0.7% |
| 14 | MAQ0410AU | Walter Scott Global Equity Fund | 5.1% | 1.0% |
| 15 | VAN0003AU | Vanguard Wholesale International Shares Index Fund | 5.0% | 1.2% |
| 16 | LAZ0014AU | Lazard Global Listed Infrastructure | 4.7% | 0.4% |
| 17 | VAN0004AU | Vanguard Australian Property Securities Index Fund | 4.7% | 0.4% |
| 18 | ETL0016AU | PIMCO Diversified Fixed Interest Fund – Wholesale | 4.6% | 0.6% |
| 19 | MIA0001AU | MFS Global Equity Trust | 4.4% | 0.6% |
| 20 | MGL0004AU | Ironbark Royal London Concentrated Global Share Fund | 4.3% | 0.5% |
Source: Class. Data as of 30 June 2023 derived from 186,220 SMSFs that use Class software.
*Percentage each managed fund makes up of the total SMSF managed fund investments e.g. Platinum International Fund has account for 1.7% of the total SMSF investments in managed funds.
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