A managed fund is a type of investment that allows multiple investors to pool their money into a portfolio administered by a professional fund manager. The pooled money may be invested across a range of assets, including shares, bonds, and property, with the aim of achieving a return through either capital growth or income.
By investing in managed funds, investors can share in the potential returns of a diversified portfolio without having to directly manage their investment personally. Instead, the fund manager is responsible for the day-to-day operations, making all investment decisions based on the fund’s objectives and strategy.
Australian Secure Capital Fund Ltd (ASCF) manages three pooled mortgage funds offered to retail investors, each tailored to different investor risk profiles. These funds invest in short-term loans secured by registered mortgages over Australian properties. Investors’ contributions are collectively used to finance a diversified pool of mortgage loans, rather than being tied to a specific borrower or property.
How do Managed Funds Work?
Managed funds pool together money from different investors. This combined capital is then invested in a range of assets by the fund manager. Investors do not own the underlying investments, but instead buy “units” in the fund. The number of units you own depends on the unit price when you invest. For example, a managed fund investment of $5,000 at a unit price of $1 would get you 5,000 units.
Unit Pricing & Ownership
The unit price, or value of each unit, is recalculated as the market value of the underlying assets in the fund changes. ASCF calculates the unit price for each of its funds monthly, and this updated information is made available on our website. Since inception, the price of each of our funds has remained at $1 per unit.
Returns: Capital Growth and Distributions
You can earn a return on your investment when the unit price increases (also known as capital growth), while managed funds can also pay income or distributions according to a specific schedule. You may have the option of receiving a payment deposited electronically into your nominated account or reinvesting your income for more units in the fund.
What is a Managed Fund Distribution?
A managed fund distribution refers to the targeted payments made to investors from the fund’s earnings. In a mortgage fund, these overall earnings are generated by the interest paid on the fund’s underlying asset portfolio, while in other structures, this may include interest, dividends, or capital gains. These distributions are typically paid out at regular intervals (e.g., monthly, quarterly, or annually) and have the potential to provide investors with a steady income stream.
Fund Management & Investment Strategies
Each managed fund has its own investment strategy. This determines which assets the fund invests in, the level of risk to investors, the expected returns, and the costs of managing the fund. The investment fund manager will use their expertise to decide where to invest the combined capital according to the fund’s strategy. They will also monitor the performance of the investments and make any changes as needed.
Listed vs. Unlisted Managed Funds
Managed funds can be either listed or unlisted, which affects how investors buy and sell units.
- Unlisted Managed Funds: These are the most prevalent type of managed investment fund in Australia. The unit price is set by the fund manager because the units are not traded on a public exchange. To purchase or sell units in an unlisted managed fund, you must deal directly with the fund manager.
- Listed Managed Funds: These funds are traded on public exchanges, such as the Australian Securities Exchange (ASX). Investors can buy and sell units through a broker, and prices fluctuate based on market demand and supply. Exchange-Traded Funds (ETFs) are a common example of listed managed funds.
ASCF only operates unlisted mortgage funds.
Benefits of Investing in a Managed Fund
Professional Fund Management
Managed funds give investors access to the financial expertise of a professional investment fund manager, who makes decisions on the Fund’s behalf. This can be especially helpful for those who do not have the time or knowledge to manage their own investments. For example, managed funds investing in shares may be overseen by a professional stock market analyst. This specialist investment fund management can offer investors peace of mind knowing that their money is in experienced hands.
Diversification
Diversification is another key benefit of managed funds. By pooling funds, investors can take advantage of a wide range of investment opportunities, which can be difficult to access on their own. Managed fund investments are typically spread across different asset classes, market sectors, and even geographic regions. A diversified investment portfolio can help to reduce risk and improve returns over the long term because your investment isn’t tied to a particular asset or security.
Considerations
There are also risks associated with managed funds. For instance, you have no control over investment decisions and may not know the exact makeup of the fund’s portfolio. The markets may go against the managed fund, which could lead to losses. Some managed funds may also carry additional risks based on the type of assets they invest in.
You should carefully examine the fund’s investment strategy, asset allocation, and other available fund information to help determine if a managed investment fund aligns with your objectives. The directors of ASCF have over 80 years of combined experience in finance and property, with all funds invested in mortgages diversified both geographically and by property type. To view a detailed summary of ASCF’s mortgage investments, please click here.
How do Managed Funds Compare to Direct Property Investment?
Investors looking to enter the property market often consider two approaches: managed funds that invest in property-backed assets or direct property ownership. While both can provide returns, they come with distinct differences in management, risk, and accessibility.
The table below highlights the key differences to help you assess which approach better suits your financial goals.
| Factor | Managed Funds | Direct Property Investment |
| Diversification | Spread across multiple loans/assets | Tied to a single property |
| Liquidity | Moderate (depends on fund type) | Low (requires selling or refinancing property) |
| Management | Professionally managed | Self-managed (tenant management, maintenance, etc.) |
| Time Commitment | Low (fund manager handles decisions) | High (property management, legal, maintenance) |
| Income Potential | Regular distributions (income or reinvestment) | Rental income, but may have vacancies |
| Risk Profile | Varies based on fund strategy | High (property values fluctuate, tenant risks) |
| Entry Costs | Low (invest with a smaller amount) | High (deposit, stamp duty, legal fees) |
How to Compare Managed Funds
Managed investment schemes can provide a great opportunity to grow your money, but every fund has different strategies, risks, and fees involved, which also means varying potential returns. It’s important to understand how to compare managed investment funds so you can choose one that best meets your needs.
Here are some key things to consider before you invest in a managed fund:
Risk Profile
The risk level of a managed fund depends on the asset classes the fund invests in. Investments such as cash or fixed interest are lower risk and aim to provide regular income and protect the capital invested. Growth investments like property or shares are higher risk, but offer a higher potential return. Choose an investment fund with a risk profile you’re comfortable with. You can also compare the risk profiles of different funds by reviewing their Target Market Determinations (TMDs).
Investment Strategy
Make sure that the managed fund’s investment strategy aligns with your own objectives. Are you aiming to generate a regular income, or are you looking for long-term capital growth with your managed investments? Every fund will have a different strategy, so you need to find one that fits your financial goals, investment time frame, and risk tolerance.
Management Fees
Managed funds charge a range of different fees to manage your money, which can have an impact on your investment return. These management costs may include establishment fees, contribution fees, and withdrawal fees. Be sure to examine all the fees and costs involved so you know exactly how much you’ll be paying.
Current Market Trends
Economic trends also play a key role in future returns. Monitoring industry updates and market trends can help you choose a fund that aligns with your risk tolerance and financial goals.
Visit our news page for the latest insights on mortgage fund performance and property market movements.
Withdrawal Process
Managed funds can have restrictions on when you are allowed to withdraw your money, such as a minimum investment term. You may also have to pay exit fees to close your account, along with other expenses like capital gains tax. It is important to have a clear investment timeframe and exit strategy when choosing which managed funds to invest in.
Product Disclosure Statement & Target Market Determinations
It is essential to review each fund’s product disclosure statement (PDS) when deciding where to invest your money. The PDS outlines key details about the mortgage fund to help you compare different options, such as what assets the fund invests in, the associated fees, risks, benchmark or target return, and what to do if you have a problem.
We also recommend reviewing each fund’s Target Market Determination (TMD), which outlines the type of investor the fund is intended for. To view ASCF’s product disclosure statement (PDS) and target market determinations (TMDs), click here.
How to Invest in Managed Funds
Now that we’ve answered the question “what are managed funds?”, you may be wondering how to start investing. Once you have considered your financial goals, how long you plan to invest for, and what risks you’re comfortable with, investing with Australian Secure Capital Fund is easy. We operate three different retail managed, pooled mortgage funds, each with its own unique balance of risk and return, so you can choose the fund that best suits you.
Our mortgage investments pay targeted distribution rates of 6.35% to 7.75% per annum* (current since 1 June 2026), depending on your choice of fund and investment term.
To get started, you can apply online or download and complete the New Investor Application Form.
*Distribution rates are an investment objective and not a forecast.
This article provides general financial product advice only. It is always recommended that you seek personal advice from a licensed financial adviser. They can assess your financial situation and objectives. Before making any further investment decisions, you must read the relevant Product Disclosure Statements (PDS) and Target Market Determinations (TMD) documents in full.
