Buying and selling mFunds: what you need to know
An mFund is an unlisted managed fund settled under ASX operating rules and through the mFund Settlement Service.
"You buy units in a managed fund from the fund's manager via your online broker," says Steve Mickenbecker, group executive of financial services for Canstar.
"It looks and feels like you are buying on market, even though you buy from the fund's manager, and similar rules apply to the buy/sell transaction and settlement.
"Taking a step back, a managed fund pools investors' money and is managed by professional brokers or investment managers. The asset allocation, investment decisions, timing and transacting of the fund are managed by the fund, in compliance with the investment mandate. Effectively the investor is outsourcing the investment."
Here are two things you need to know about mFunds.
How much money do you need to invest in an mFund?
Peter Green, Head of Listed Products Research, Lonsec
There are a range of minimum investments for mFunds and these tend to be product specific.
As a guide, the current range of minimums across the mFund family is from $1000 through to $100,000. However, the majority of these are within the $10,000-$25,000 band.
What happens when I want to sell my mFund investment?
Oran D'Arcy, Business Development Manager, ASX Limited
Similar to buying (applying for) units via mFund, the selling (redeeming) of units is done by instruction to the investor's broker, who in turn initiates the redemption via the fund manager.
Once the units are redeemed, the proceeds are paid to the investor's nominated bank account.
For more on mFunds, pick up the April issue of Money, out now