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If you’re looking to invest in a managed fund you may want to consider mFunds. An mFund is an unlisted managed fund that you can put money into through an online share trading platform.
This is possible because the funds are signed up to be settled by the Australian Securities Exchange (ASX) mFund service. It means that you can easily track your holdings online in the one place along with other investments such as shares and ETFs. Follow our mFunds guide to find out how they’re different from other kinds of funds and how to invest in them.
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
*Brokerage fees shown are for standard share trading, see below for a list of mFund fees.
An mFund is an actively managed unlisted fund that you can invest in through an online broker and which is settled by the ASX’s mFund Settlement Service. The service, which uses the CHESS ASX settlement system, allows you to buy and sell units in managed funds that aren’t listed on the ASX quickly and easily online.
The mFund service launched in 2014 and there are now more than 200 funds available from 68 fund managers.
CHESS: The computer system used by the ASX to manage share transaction settlements and record holdings.
When you buy units in an mFund, your holdings may be electronically linked to your Holder Identification Number (HIN) through the ASX, which means they can be tracked along with other investments such as shares and ETFs in the one spot such as an online broker.
As is the case with regular managed funds, mFunds can pool your money into any number of securities such as bonds, shares, cash and property. Many of these are single-asset funds, though it’s also possible to invest in a mixed asset fund, which could include cash, shares, property and more.
You can also invest in specific sectors, such as a fund of Chinese company stocks or a portfolio of Australian infrastructure stocks, or broader themes, such as an ethical company fund. These range from high risk to low risk and some are highly volatile.
For example, emerging market funds will be higher risk than Australian equity funds. It’s important to do your homework or speak to a professional before investing. There are 10 main types of mFunds available as categorised by the ASX. These are:
To date there are more than 200 mFunds on the market. Here are the 10 best performing mFunds over the past five years after fees (to June 2019). It's important to remember that past performance isn't a guarantor of future results and it will depend on economic trends, fees and management decisions.
Fund name | ASX Code | MER*(% p.a) | 5-year return (ann.) | 3-year return (ann.) | 1-year return |
---|---|---|---|---|---|
Legg Mason Martin Currie Property Securities Fund | LMA16 | 0.72% | 9.97% | 3.39% | 5.41% |
Legg Mason Martin Currie Diversified Income Trust | LMA05 | 0.80% | 9.87% | 7.88% | 9.87% |
SGH Property Income | SHF03 | 0.95% | 9.85% | 4.21% | 4.48% |
Fidelity Hedged Global Equities | FIL14 | 1.04% | 9.78% | 13.47% | 6.01% |
Schroder Global Emerging Markets Wholesale | SCH41 | 1.40% | 9.76% | 14.20% | 6.20% |
SGH ICE | SHF02 | 1.18% | 9.66% | 5.99% | -0.02% |
Hyperion Australian Growth Companies | HYN01 | 0.95% | 9.57% | 8.80% | 6.05% |
Aberdeen Asian Opportunities | AFZ01 | 1.23% | 9.56% | 11.80% | 10.70% |
Ausbil 130/30 Focus Fund | AXW05 | 1.00% | 9.49% | 13.36% | 8.31% |
Armytage Strategic Opportunities Fund Wholesale | ACY02 | 1.31% | 9.38% | 11.15% | 7.24% |
Source: ASX | June 30, 2019 *MER = Management expense ratio. This is an annual fee taken by the fund provider and is calculated as a percentage of the fund's balance.
There are several costs associated with investing in mFunds including brokerage fees, management fees, the minimum investment and price per unit.
Here are some of the online and full-service brokers that provide access to mFunds along with their associated brokerage fees:
Broker | Type | mFund brokerage fee |
---|---|---|
ANZ Share Investing | Online broker | $29.95 or 0.11% of trade value (whichever is greater) |
Bell Direct | Online broker | $30 or 0.1% of trade value (whichever is greater) |
Bendigo Invest Direct | Online broker | $40.00 or 0.20% of trade value (whichever is greater) |
BOQ Trading | Online broker | $49.95 or 0.198% of trade value (whichever is greater) |
Burrell | Full service broker | 2.2% of trade value (whichever is greater) |
CMC Markets Stockbroking | Online broker | $29.95 or 0.11% of trade value (whichever is greater) |
HSBC Online Share Trading | Online broker | $30 or 0.12% of trade value (whichever is greater) |
Macquarie Online Trading | Online broker | $30 or 0.1% of trade value (whichever is greater) |
Nabtrade | Online broker |
|
St.George Directshares | Online broker | $29.95 or 0.11% of trade value (whichever is greater) |
Suncorp Share Trade | Online broker | $49.95 or 0.19% of the trade value (whichever is greater) |
mFunds are regular managed funds but with the added bonus that they can be settled by the ASX mFund service. Put simply, instead of applying through a paper mail application or a full service broker, you have the additional option to invest in one quickly through an online broker.
For example, the UBS Emerging Markets Equity Fund is a managed fund that is available through the mFund Settlement Service. You have the choice of applying for units through mFund via a stockbroking service or you can apply for units directly in the fund by mailing in a paper form.
mFund investment method. If you apply for units in the UBS fund through the mFund, you’ll be charged a brokerage fee and your minimal initial investment is $5,000. You will be able to apply for units quickly in an online application through a trading platform or broker. Your money is transferred from your selected bank account automatically. Your mFund units can be tracked online along with other investments such as shares.
Direct investment. If you apply for units directly in UBS, you avoid the brokerage fee, however your minimal investment in this case is twice the amount at $10,000. You’ll also need to apply by filling in a paper form and posting it in the mail along with identification and bank details. You’ll then have the option of transferring funds via bank transfer, cheque or BPAY.
Both mFunds and (exchange traded funds (ETFs) are investment funds that hold a collection of assets owned by the fund issuers, but there are a few differences:
You can invest in mFunds through select full service brokers and online share trading platforms. To date, there are 20 brokerage services that offer access to mFunds.
Investing in mFunds through your broker is similar to investing in shares. Simply select your desired fund and place your order – you shouldn’t need to supply any additional paperwork than you normally would when investing in a managed fund. The funds will settle as they normally do from your bank account.
To invest in an mFund follow these steps:
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