Legal Definitions - fully managed fund

A fully managed fund is an investment vehicle where professional fund managers make all the decisions regarding the buying, selling, and management of the fund's assets on behalf of investors. This means that individuals who invest in such a fund do not need to actively research stocks, bonds, or other securities, nor do they need to monitor market trends or rebalance their portfolio. Instead, they entrust their capital to experts who aim to achieve specific investment objectives, such as growth, income, or a balanced approach, for a fee.

Here are some examples illustrating how a fully managed fund works:

• Example 1: Retirement Planning for a Busy Professional

  Dr. Anya Sharma is a surgeon with a demanding schedule. She wants to save for retirement but lacks the time and expertise to research individual stocks, analyze market trends, or manage a diverse investment portfolio herself. She decides to invest a portion of her salary each month into a "Global Equity Fully Managed Fund."

  How this illustrates the term: Dr. Sharma benefits from the fund's professional managers who actively select, buy, and sell shares in companies across various international markets. She doesn't need to make any investment decisions; the fund managers handle everything from asset allocation to rebalancing, allowing her to focus on her career while her retirement savings are professionally overseen.

• Example 2: Endowment Management for a Non-Profit Organization

  The "Green Earth Foundation," a non-profit organization, receives a significant donation intended to grow its endowment and provide long-term funding for environmental projects. The foundation's board members are experts in conservation, not finance, and they do not have an in-house investment team. They choose to invest the donation in a "Conservative Income Fully Managed Fund."

  How this illustrates the term: The foundation relies entirely on the fund's professional managers to invest in a mix of lower-risk assets like bonds and dividend-paying stocks, aiming for steady income and capital preservation. The board avoids the complexity and time commitment of managing the endowment directly, trusting the fund managers to make all investment choices in line with the fund's conservative objectives.

• Example 3: College Savings for New Parents

  Maria and David are new parents who want to start saving for their daughter's college education but have no prior investment experience. They are intimidated by the stock market and want a hands-off approach. They open an account with a "Target-Date Fully Managed Fund" set for their daughter's expected college enrollment year.

  How this illustrates the term: The target-date fund is a type of fully managed fund where the professional managers automatically adjust the investment strategy over time. When their daughter is young, the fund might invest more aggressively for growth. As she approaches college age, the managers will gradually shift the portfolio to more conservative investments to protect the accumulated savings. Maria and David do not need to make any changes or rebalance the portfolio themselves; the fund managers handle all these adjustments automatically.