Managed funds and investment fees
How managed funds pool your money, the fees you might pay, and why a small percentage can make a big difference over time.
The short version
- A managed fund pools your money with other investors and a professional invests it.
- Fees are charged whether the fund does well or badly.
- A 1% yearly fee difference can cost tens of thousands over 25 years.
- Read the PDS fees section and ask for costs in dollars.
A managed fund lets you invest alongside lots of other people, with a professional making the day-to-day decisions. It’s convenient, but it comes at a cost, and those costs matter more than most people realise.
How managed funds work
When you invest in a managed fund, your money is pooled with money from other investors. A fund manager then buys investments according to the fund’s goals.
You get “units” in the fund. As the investments rise or fall, so does the value of your units. Many funds also pay distributions, which are your share of the income the fund earns.
Super funds work in a similar way. Your super is pooled with other members’ money and invested for you.
Types of funds
Funds are usually described by what they invest in and how much risk they take.
| Fund type | Typical mix | Risk level |
|---|---|---|
| Cash | Bank deposits, short-term securities | Low |
| Conservative | Mostly cash and bonds, some shares | Low to medium |
| Balanced | A mix of growth and defensive assets | Medium |
| Growth | Mostly shares and property | Medium to high |
| Single sector | One area, like Australian shares or infrastructure | Varies |
Some funds are active: the manager picks investments to try to beat the market. Others are passive (index funds): they simply follow a market index. Passive funds usually charge less.
Managed funds vs ETFs
Many ETFs are actually managed funds that you buy and sell on the stock exchange. Unlisted managed funds are bought directly from the fund manager or through an investment platform.
- Unlisted funds may have minimum investment amounts and can take days to pay out when you sell.
- ETFs can be bought and sold during trading hours, but you pay brokerage each time.
The fees you might pay
Fees can come from several places. Common ones include:
- Management fee: a yearly percentage of your balance, for running the fund.
- Performance fee: an extra fee if the fund beats a target.
- Buy/sell spread: a small cost each time you put money in or take it out.
- Platform or administration fee: if you invest through a platform or wrap account.
- Adviser fees: if a financial adviser recommends or manages the investment.
All of these are taken from your money whether the fund goes up or down.
Why small fees add up
Fees don’t just cost you money once. They reduce the amount left to grow, year after year, so they cut into compounding too.
A higher-fee fund needs to earn higher returns just to keep up. Some do, but many don’t over the long run.
Read the PDS
Every managed fund must give you a product disclosure statement (PDS). It explains how the fund works, its risks and its fees. Look for:
- What the fund invests in and its risk level
- Fees and costs, usually in a table, often with a worked example
- How to get your money out and how long it takes
- Past performance, keeping in mind it doesn’t predict future returns
If you use a financial adviser, you must give written consent each year before ongoing advice fees can be charged. The adviser has to tell you what services you’ll get for the fee.
Next steps
- Find your current super and investment statements and add up the fees in dollars.
- Compare the fees of a few funds with a similar investment mix.
- Use a compound growth calculator to see how fees change your long-term balance.
Work out your numbers
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Sources and further reading
General information only. This video doesn't take into account your objectives, financial situation or needs. Figures are for 2026–27 and can change. Check the official sources above.