Are fund managers worth all that fees?

A common perception that people have on actively managed investments is that it is expensive because of the management fees which typically range from 1.2% to 1.5%, as compared to passive funds where management fees are as low as 0.4%. It is true that actively managed investments tend to have higher fees but there are good reasons why.

Just like how anyone who have a job should be paid a salary, fund managers are also working professionals like us who have bills to pay or families to raise. There is a huge amount of intense research, analysis and sound decision-making process behind which requires time and money to achieve. And this is a full-time job for a fund manager which merits a certain amount of fees along with it.

For those who are new to investing, let us tell you why investing into an actively managed fund, also known as unit trust or mutual fund, isn't as expensive as you think.

Managed by professionals

A fund manager is responsible for implementing a fund's investing strategy and managing its portfolio trading activities. Regardless of your investment amount, any investor can have access to a professional fund manager who monitors your investment on a daily basis and make strategic decisions to help achieve the fund's objectives on your behalf. A fund manager, will also evaluate market conditions, mitigate market risks, identify the potential impact of a crisis and choose to avoid exposure in a given region or buy at depressed levels. Most of the funds on dollarDEX are actively managed by professionals and by leaving it to them, means you have more time to focus other important things in life.

Diversification and easy access to different types of investment instruments

A unit trust is like a basket, and that basket holds assets, like stocks. When you buy a unit trust, you purchase a unit of the fund. This also means you have ownership in an investment vehicle that owns an investment by pooling your funds with other investors. This means you are already diversified when you invest in a unit trust. Investing in unit trusts also provides access to various investment opportunities that you would not have been able to access in your individual capacity.

Access to timely information

Because fund managers spend a great deal of time keeping track of the performance and has the expertise to do so, they spend time visiting the companies that they invest in and understand what is truly happening on the ground, as well as meeting the senior management before making any investment decisions. This is something retail investors like yourself do not have the ability and the luxury of time to do so. Active fund management also have an important role to play in emerging markets where information about individual company prospects is not easily available.

Despite the easy market access to different types of investments, investors should be aware of their financial situation and make investment decisions based on their risk appetite. At dollarDEX, we help you make the most out of your investments by not charging any fees! All you have to do is to pay the fund managers for their expertise which will already be reflected in your fund's daily Net Asset Value (NAV). Start your investment journey to make the most out of your money today!

Still not convinced why you should be getting "active"? Check out Allianz Global Investor's article here to find out how active managers outperformed their passive peers during recent major market downturns.