Thursday, November 25, 2021

1. Benefits of managed Funds - Critical Mass


Critical Mass - most managed funds will have assets under management (AUM) in the hundreds of millions, this gives these funds the advantages of "critical mass"- the benefit of getting a higher return from the same instrument because of its size.

Let's take "time deposit" as an example.

You have 50,000 you want placed in a 30-day time deposit, 

on your own, the interest you get will be proportionate to the size of your deposit which is 50,000.

A 500 million fund that only invests in "time deposits" would be able to negotiate for higher interest rate because of its massive size.

The key is to find a fund with investment objectives and parameters that matches your own, instead of investing DIY style, the investor will be better off investing in the fund to benefit from critical mass.


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