Diversification and multi-manager funds

The principle of investment diversification is that your funds aren’t allocated to a single investment market or asset class but are spread across different ones. This reduces your risk on the basis that different investment types perform differently relative to each other over time, and because some are inherently more conservative or defensive (cash, fixed interest) than others such as growth assets like shares and property. The principal ways you can diversify your investments include:

• Investing in a managed fund (or within your super) that includes all the major asset classes. Often called diversified funds, they typically fall into either growth, balanced, defensive or conservative versions depending on their ratios of growth to defensive assets.
• Investing in a single-sector managed fund (one that invests in one market sector such as Australian shares) which will spread investors’ pooled money to buy shares in lots of different companies. (Listed Investment Companies, themselves traded on the stock exchange, work in a similar way.)
• Invest in a single fund (which could be a diversified or single-sector fund) which then invests in a selection of other managed funds across different fund managers, rather than investing directly in shares, property, cash etc. These single portfolios made up of multiple managed funds are also called multi-manager funds.

Manage the Manager System

Fiducian offers a suite of managed funds which provide investors a choice of diversified, sector and specialist funds. Each of the funds is managed by Fiducian’s Manage the Manager System. The Fiducian Manage the Manager System is based on the principle that several carefully selected investment managers can, over any reasonable period, produce a better result, more consistently and with lower volatility, than a single manager. Multi-manager funds bring some of the best managers from Australia and around the world together in one fund to manage your money. The philosophy of multi-manager funds is that careful diversification is essential to an effective investment strategy. Using different fund managers as well as different asset classes provides an additional layer of diversification because different managers are unlikely to perform equally in all market conditions.

Learn about Fiducian multi-manager funds

Learn about Fiducian’s Manage the Manager System

If you require further information please contact our Financial Adviser on (03) 9848 5933.

Source:  https://www.fiducian.com.au/investments/manage-the-manager-system/?utm_medium=email&utm_campaign=Monthly%20Economic%20Commentary%20August%202021&utm_content=Monthly%20Economic%20Commentary%20August%202021+CID_4009ca85b1eb91c5562ca0f9edff59a5&utm_source=Email%20marketing%20software&utm_term=Post%20Tax%20Time%20Planning

Lindale Insurances Pty Ltd ATF Lindale Insurances Trust ABN 27 027 421 832 is a Franchisee of Fiducian Financial Services Pty Ltd, Level 4, 1 York Street, Sydney NSW 2000. AFSL 231103 ABN 46 094 765 134.

The information (including taxation) provided on this website is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement.

Disclaimer:
The views expressed in this publication are solely those of the author; they are not reflective or indicative of Fiducian. They cannot be reproduced in any form without the express written consent of the author.