Some of the disadvantages of investing through a managed fund are:
- You may not know exactly what direct investments your managed fund holds.
- You do not have control over the investments bought and sold within the managed fund nor the timing of those transactions.
- As a result of this, you’re not likely to be able to manage the capital gains or losses that will be passed on to you.
- Your distributions may include a component that represents a return of your original capital.
- You may incur higher fees than with other investment options.
- You may have difficulty deciding which managed fund to invest in.
- The fund manager’s performance (after fees) may not outperform the comparative market index.