FAQ: How are Managed Funds Regulated?

Professional investors and money managers seem to speak their own language, and if the novice investor is not educated in the appropriate terms, investment strategies can be extremely complex. Managed funds are one such term that can be confusing as there are several different names it can go by.

Names for Managed Funds

Worldwide managed funds can also go by these names:

  • Managed investments
  • Retail fund
  • Investment funds
  • Mutual funds
  • Collective investments
  • Master trusts
  • Unit trusts
  • Multi-sector funds
  • Pooled investments
  • Managed investment schemes
  • Fund of funds

Each country tends to have their own Government sector regulating the managed funds industry, in America we have the U.S. Securities and Trade Commission.

Although the U.S. Securities and Trade Commission may oversee the general rules associated with managed funds, it is important to realize that there is still a risk involved in these types of investments. There is no Government or Federal insurance backing the investments, thus if you put your money into a managed fund and the value declines, you must play the cards you were dealt.

Government Oversight

If the term “managed funds” is being used as a synonym for “mutual funds,” there is a slew of Government regulations in place to protect the investors. The U.S. Securities and Trade Commission states that some regulations include “requiring a certain degree of liquidity, regulations requiring that mutual fund shares be redeemable at any time, regulations protecting against conflicts of interest, regulations to assure fairness in the pricing of fund shares, disclosure regulations, regulations limiting the use of leverage, and more.” Additionally, according to the U.S. Securities and Trade Commission, “The investment portfolios of mutual funds typically are managed by separate entities known as “investment advisers” that are registered with the SEC.”

Building Wealth

If you are interested in learning more about managed funds and their regulations, you can request product disclosure information regarding a particular investment opportunity.

About the Author

GOBankingRates Staff

These articles are written by the in-house GOBankingRates team.

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