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What are Managed Funds

Managed funds, also known as mutual funds or collective investment funds, are investment vehicles that pool money from numerous investors to create a diversified portfolio of stocks, bonds, or other securities. These funds are managed by professional fund managers or investment firms who make decisions on behalf of the investors.

Here's how managed funds typically work:

  • Pooling of Funds: Investors contribute money to the fund, and their money is combined with that of other investors.
  • Diversification: The fund manager uses the pooled money to invest in a diversified portfolio of assets. This diversification helps spread risk and minimize the impact of poor-performing assets on the overall fund.
  • Professional Management: The fund is managed by professional fund managers who make investment decisions based on the fund's objectives and strategy. These managers conduct research, analyze market trends, and actively manage the portfolio to achieve the fund's goals.
  • Units or Shares: Investors in a managed fund receive units or shares representing their ownership in the fund. The value of these units or shares is determined by the net asset value (NAV) of the fund, which is calculated based on the current value of the fund's assets minus its liabilities.
  • Liquidity: Managed funds offer liquidity, allowing investors to buy or sell units on any business day. The price at which units are bought or sold is based on the NAV.
  • Fees: Investors typically pay fees for the management and operation of the fund. Common fees include an expense ratio, which covers management fees and other operational costs.

Managed funds can invest in various asset classes, such as stocks, bonds, money market instruments, or a combination of these. They cater to different investment goals and risk tolerances, offering options for conservative investors seeking income, as well as for those looking for capital appreciation and growth.

It’s important for investors to carefully consider the fund’s investment objectives, risk profile, and fees before investing in a managed fund. Additionally, past performance is not indicative of future results, so thorough research is essential for making informed investment decisions.

What is a Reverse Mortgage

A reverse mortgage is a financial product designed for homeowners who are typically aged 60 or older. It allows them to convert a portion of their home equity into cash, which can be received in various forms, such as a lump sum, regular monthly payments, or a line of credit. Unlike a traditional mortgage where the borrower makes monthly payments to the lender, in a reverse mortgage, the lender makes payments to the borrower.

Key features of a reverse mortgage include:

  • Age Requirement: The borrower must be at least 60 years old to qualify for a reverse mortgage.
  • Homeownership: Home ownership unencumbered (applicable to 80% of the Australian seniors population of 5.7 million) or have the LVR loan capacity to discharge an existing mortgage on the security property.
  • Primary Residence: The property being used for the reverse mortgage must be the borrower's primary residence. Postcode acceptability via the provider following review.
  • Loan Repayment: Unlike a traditional mortgage, the borrower is not required to make monthly mortgage payments. The loan is typically repaid when the borrower moves out of the home, sells the home, or passes away. The repayment is usually made from the sale of the home, and any remaining equity goes to the borrower or their heirs.
  • Interest Accrual: Interest on the reverse mortgage loan accrues over time, and it is added to the loan balance if they so choose. Interest payments can be made regularly, irregularly or not until repayment of the loan balance when the title holder leaves the property. This means that the total amount owed increases over the life of the loan.

Reverse mortgages can provide a source of income for retirees who want to tap into their home equity without selling their property. However, it’s essential for borrowers to carefully consider the terms, costs, and potential impact on their heirs. Additionally, counseling is often required before obtaining a reverse mortgage to ensure that borrowers understand the implications of the loan.

As regulations and terms may vary, individuals considering a reverse mortgage should seek advice from financial professionals and explore the specific terms of the product offered by lenders.

Key Terms & Definitions

  • Capital Funding – Capital Funding money lent to a business for long term needs, the business uses this money for operating needs and capital and can be raised by stock or debt issuance. Stock IPO or debt, issuance of corporate bonds to retail or institutional investors.
  • Reverse mortgage - is a credit facility that is typically secured against residential property. Reverse mortgages are a type of ‘equity release product’ as they allow borrowers to release the equity in their home without losing possession of the property. They are the only type of equity release product that are regulated as credit products under the National Credit Act.
  • Risks of a reverse mortgage - Erosion of equity in the home. Due to the effect of compound interest over a relatively long loan term, borrowers who keep the loan for a longer period of time can face an erosion of their wealth (equity) in their home. If too much wealth is eroded, there is a risk that the borrower will find it more difficult to afford future needs when the home is ultimately sold to repay the loan.
The ultimate effect of a reverse mortgage on the borrower’s remaining equity depends on any changes in the interest rate for the loan, changes in the value of the property, and the duration of the loan. These factors can be difficult to predict in the long term.

Educational Webinars

– Participate in live webinars and on-demand video sessions hosted by financial experts, covering a wide range of topics such as investment strategies, retirement planning, and wealth management.
– Learn from industry professionals as they share insights, best practices, and actionable tips to help you enhance your financial literacy and investment knowledge.

Glossary of Terms

- Consult our comprehensive glossary of financial terms to demystify complex terminology and understand the language of investing.

- Find definitions, explanations, and examples of commonly used financial terms, abbreviations, and concepts to enhance your understanding of the financial landscape.

Customer Support

- Reach out to our dedicated customer support team for assistance with account inquiries, technical support, or general questions about our products and services.

- Access contact information, FAQs, and support resources to help you navigate your financial journey with confidence and peace of mind.

Investment Guides

  • Explore comprehensive investment guides covering various asset classes, investment strategies, and financial planning topics.
  • Learn about key concepts, investment principles, and practical tips to help you build and manage your investment portfolio effectively.

Financial Calculators

  • Access a range of interactive financial calculators to help you calculate potential returns and how much you may be able to invest.
  • Utilise tools such as compound interest calculators, retirement income planners, and investment risk assessors to make informed financial decisions.

Market Research Reports

  • Stay updated on market trends, economic outlooks, and industry insights with our collection of research reports and market analysis.
  • Gain valuable perspectives from industry experts and analysts on key sectors, emerging trends, and investment opportunities in the global market.

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