Mutual Funds Versus Managed Accounts

Both managed accounts and mutual funds allow investors to take benefit of professional money management in order to grow their investment funds. Mutual funds are offered on a large scale to major investors, while managed accounts have generally only been available to wealthy investors. With more access to managed accounts than ever before, many investors end up choosing between this kind of investment and mutual funds.

Similarities

The mutual fund and the managed account both use professional money managers to make investment decisions. Having a mutual fund, you put your hard earned money in with other investors and create a large portfolio that the fund manager can use. With managed accounts, everyone’s money stays separate in their own accounts. The money manager makes investment decisions on behalf of each of his clients. With both of these options, you can rely on the experience and expertise of a professional money manager to help grow your account instead of handling everything all on your own.

Benefits

Mutual funds offer the benefit of being able to invest even if you’re just getting started financially. This is an investment type that is accessible to everyone. They also give you economies of scale by pooling your money together with a large group of people. A managed forex account give you flexibility that you can’t get from a mutual fund. For instance, if you don’t like a particular security that the money manager is investing in, you can have the manager liquidate your individual shares in that security.

Tax Efficiency

One key area in which these two types of investments differ is in the tax efficiency. With mutual funds, you’ve got no control over when securities are bought or sold. This leads to a lack of control in when and how you’ll pay capital gains taxes. With managed accounts, you’ve got complete control over when securities are bought and sold. This lets you decide exactly when you want to take a gain or loss, which can improve your tax efficiency.

Information

Among the big differences between mutual funds and managed accounts is in the amount of information that you have about your investments. When investing in a mutual fund, you will gain access to the holdings of the fund a couple of times per year. With a managed account, you’ve got full access to all of your individual holdings anytime. This lets you see what you’re investing in and ensures that you agree with the strategies used.

Minimum Investment

Perhaps the largest distinction between a forex managed account and mutual funds is the minimum investment required. With most mutual funds, you can get started for $100 or less. This makes mutual funds widely accessible to nearly anybody who wishes to invest. With managed accounts, the minimums are much larger. You should expect to come up with at least $100,000 in order to open an account. This makes it possible for only the wealthy to enjoy this kind of account.