Benefits of investing in actively managed mutual funds

view original post
Businessman analysing funds in the office. Photo: Getty Images/iStock

Businessman analysing funds in the office. Photo: Getty Images/iStock

This content was produced in partnership with Citibank Singapore

Savvy investors see the silver lining in good and bad times.

While an economic downturn is generally less desired, it can bring both risk and opportunity in equal measure. If prices fall, astute investors may be able to seize rare opportunities to snap up undervalued assets.

By taking advantage of market volatility, and balancing risk and reward, such investors can find the potential for wealth growth even in a downturn. Doing so is a time-consuming process however, and many investors lack the ability to track markets in real time or conduct intensive research into related assets.

Even among seasoned traders, there’s often a need for expert opinion or help. This is where an actively managed fund offers significant advantages.

What is an actively managed fund?

An actively managed fund – sometimes called a unit trust (note that not all unit trusts are actively managed funds; consult the relevant fund factsheet for further details) or mutual fund – pools money from multiple investors.

A fund manager then uses the money to invest in a range of assets, making decisions such as buying and selling on behalf of the investors. The returns from the managed fund are used to pay the fund manager and provide returns to the investors.

The key difference between an actively managed fund and a passive fund, such as an exchange-traded fund (ETF), is that the fund manager will attempt to derive a return that beats the market. For example, if the return from a given market index is 5 per cent, then an actively managed fund may seek to deliver returns of 5.5 per cent.

This is different from a passively managed fund, such as those often provided by robo-advisors. Passively managed funds just track the market. So, if the underlying index has returns of 3 per cent, this is about the same amount you’ll get. There is no attempt to implement trading strategies for optimum results.

Additionally, some trading opportunities may last only minutes or seconds, making it difficult for non-full-time investors to react. The good news is, fund managers have the nimbleness to respond to market changes quickly and take advantage of short-term trading opportunities. By buying into an actively managed fund, investors naturally are able to benefit from this advantage.

These reasons are why banks like Citi offer unit trusts managed by trusted and experienced fund managers, who have the skill and expertise to actively manage a variety of assets.

Why invest in an actively managed fund with Citi?

1. Better returns by leveraging on deep knowledge, experience, and time

Clients can benefit from a Citi-curated selection of funds so that there is a breadth and depth of quality choices to fit various investment strategies and appetites. Citi’s global presence means that its relationship managers, who advise clients on investment decisions, have access to holistic and incisive market insights from all parts of the world.

Investors can rest easy knowing that ultimately, professionals are dealing with investment decisions such as buying and selling – good fund managers remove the need for guesswork and anxiety.

2. Take lower risks in your efforts to find higher returns

Because they are managed by professional fund managers, unit trusts can help you derive higher potential returns, with comparatively lower risk. Fund managers are engaged with your investments throughout all market hours and can respond faster to unexpected risks.

Active fund management can also be tailored to match your risk appetite. Some active funds have lower risks and rewards, while others may embrace more volatility to deliver better returns.

3. Exposure to a wide range of investment choices

Actively managed funds come in diverse forms. They include equity mutual funds (stocks), debt mutual funds (bonds), emerging market funds, hedge funds, and many others.

This allows investors to benefit from numerous market segments, in which they might usually be excluded due to lack of expertise or availability. In addition, buying into a fund diversifies your investment over a range of assets; this is often more cost-effective than manually buying different assets.

4. Easily track your investments and enjoy expert insights

Through Citibank Online or the Citi Mobile® App, Citi consolidates and presents ongoing reports on the performance of your actively managed funds. This includes analysis and insights from fund managers as well as Citi’s award-winning analysts.

Through the market’s ups and downs, your dedicated Citigold Relationship Manager puts you and your needs at the core of the Gold Conversation. Speak to a Relationship Manager to have an in-depth conversation about your current financial position, goals and needs, to determine a suitable investment portfolio for you.

This article is provided at your specific request and for general information purposes only. It is not intended as a recommendation nor an offer or solicitation for the purchase, loan, swap or sale of securities, financial products, services or currencies. Neither all nor part of this video/webcast may be reproduced or copied in any manner without the written consent of Citibank N.A. or its affiliates or subsidiaries (“Citi”). This video/webcast/article has been prepared without taking account of the financial objectives, situation, or needs of any particular investor. Any person or entity considering an investment should consider the appropriateness of the investment having regard to their financial objectives, situation, or needs, and should seek independent advice on the suitability or otherwise of a particular investment.

Investments are not deposits, are not obligations of, or guaranteed or insured by Citi, or by any government, insurance agency or other public institutions, and are subject to investment risk, including the possible loss of all or part of the principal amount invested. Past performance is not indicative of future performance; prices can go up or down. Investment products are not available to US persons.

Investors should be aware that it is their responsibility to seek legal and/or tax advice regarding the legal and tax consequences of their investment transactions. If an investor changes place of residence (including tax residency), nationality, or place of work, it is his/her responsibility to understand how his/her investment transactions are affected by such change/s and to comply with all applicable laws and regulations as and when the same become applicable. Citi does not provide legal and/or tax advice. If you have any questions, please contact your Relationship Manager.

Please click on the following link for other important disclosures associated with this video/webcast/article, including but not limited to disclosures relating to certain risk factors and/or specific country disclosures that are applicable to you, depending on the country of your residence: asia.citi.com/wealthinsights/country-disclosures