Who runs a managed fund?

  • The people who run your managed fund are called responsible entities (RE).
  • Investment managers look after your managed fund's investments.
  • The RE may use asset consultants to help them choose which investment managers to use, and to help them decide their investment strategy.
  • Specialist administration companies help responsible entities run the back-end administration of your managed fund, including its call centre.

Managed funds use many expert advisers. Understanding the different roles they play will help you make better sense of how a fund operates.

Remember that a managed fund is an investment fund run by someone else who is an expert in managing investments. To understand how good your managed fund is, it will help if you first learn the main roles people play  at a managed fund so you can properly judge each person based on their role and responsibility. To do this, you need to learn what these roles are and what they mean.

Responsible entity

The responsible entity (RE) is an Australian public company that plays the dual role of trustee and manager of the managed fund. The RE is responsible for running the managed fund and appointing various service providers, such as investment managers, custodians, asset consultants and administrators.

The RE must act honestly, exercise all reasonable care and diligence, act only in the best interests of the managed fund's investors and treat all investors equally. REs are regulated by ASIC.

REs are not expected to be experts in all aspects of running a managed fund, but they are expected to know how to manage people who are. Your managed fund's RE is there to represent you, and make sure the fund is  working properly for you and the other investors. If anything goes wrong with the fund, the buck always stops with them, and this motivates them to make sure that things are working properly.

Investment managers

The types of investments chosen by your managed fund or its RE will ultimately be vetted by expert companies that specialise in managing investments. These firms are called investment managers, though they can also be called fund managers or money managers. They are experts in various types of investments, and they are experienced in deciding if investments are worth making.

Investment managers decide what to buy (invest in) and when to sell or hold these investments to make the best return for the managed fund investors.

While investment managers look after the managed fund's investments, they do not operate the fund itself. This means if you have any queries, you should raise them with the RE. Taking these concerns to the investment managers will be fruitless, because investment managers are directly accountable to the RE, not the investors. Remember: the investment managers run the investments, the RE runs the fund. And even if the same company performs each role, they are separate responsibilities.

Asset consultants

When it comes to using investment managers, managed funds can choose from more than 900 investment managers in Australia, and from thousands available overseas. Not surprisingly, depending how managed funds are structured, the organisation running the fund may need help from special advisers who are experts in understanding investment managers and how to choose between them. These experts are called asset consultants or investment consultants.

Asset consultants help managed fund REs decide how much money they should invest into particular types of investments or asset classes, for example, how much money a fund should invest into overseas shares compared with Australian government bonds.

Some asset consultants have been so successful with their advising services that they have adapted these to create their own managed funds, which they now offer to investors. When this happens, asset consultants cross the line from being simply consultants to being fully fledged managed fund operators.

Administrators and platform providers

Responsible entities sometimes use specialist companies to help them administer their managed funds. These specialist administrators are experts in the government rules of operating a managed fund and in making sure the fund meets compliance and regulatory requirements. Administrators make sure that every time an investor makes a deposit into, or a withdrawal from, a managed fund the transaction is recorded properly.

Annual reports, member statements and government compliance reports are all produced and handled by your managed fund's administrators, who are directly responsible to the fund's RE. The administrator might also operate the managed fund's website, call centre and live chat function.

Administrators of managed funds are sometimes called platform providers, as they provide the backend investment platform that makes up the managed fund in addition to providing regular administration services. Platform providers offer a mix of asset consultancy expertise to managed funds, and they are usually more sophisticated in their operations than regular managed fund administration companies.


Many managed funds use special companies called custodians to hold their assets and to coordinate and keep track of the investment managers used by the managed fund.

Custodians act as an important check for managed funds because they help insulate the managed fund from fraud and dubious investment transactions. If your fund has a custodian in place, it means that if an investment fraud is perpetrated on the fund, the custodian would foot the bill, because a big part of their job is protecting the fund from fraud.

Most good managed funds use only very large and highly expert custodians. If your fund does not use a custodian that is separate from the managed fund (that is, it tries to handle this role itself) make sure you understand how the managed fund does this, because if it is not handled properly your investments could be at risk.

LICs and responsible entities

If you invest through a listed investment company, the company board also acts as the de facto RE.

 How to access managed funds
 Managed fund fees - how much and getting what you pay for