Managed Forex Accounts Versus Mutual Funds
Both managed accounts and mutual funds allow investors to take benefit of professional money management to be able 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. And with access to managed accounts than ever before, many investors end up choosing between this type 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 money in with other investors and make up 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 with respect to each of his clients. With these two options, you can depend on the expertise and experience of a professional money manager to help grow your account rather than handling everything on your own.
Benefits
Mutual funds offer the advantage of being able to invest even if you are just getting started financially. It is an investment type that’s accessible to everyone. They also offer you economies of scale by pooling your money together with a large group of people. A managed forex account offer you flexibility that you cannot get from a mutual fund. For example, if you don’t like a particular security that the money manager is investing in, you could have the manager liquidate your own 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 don’t have any control over when securities are bought or sold. Leading to a lack of control in how and when you’ll pay capital gains taxes. With managed accounts, you have complete control over when securities are bought and sold. This allows you to decide exactly when you want to take a gain or loss, which could increase your tax efficiency.
Information
One of the big differences between mutual funds and managed accounts is in the amount of information you have about your investments. When you invest in a mutual fund, you will gain entry to the holdings of the fund a few times each year. With a managed account, you have full entry to all of your individual holdings at any time. This allows you to see what you are investing in and ensures that you agree with the strategy used.
Minimum Investment
Perhaps the largest difference 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 anyone who wishes to invest. With managed accounts, the minimums are much larger. You should expect to come up with at least $100,000 so as to open an account. This will make it possible for only the wealthy to enjoy this kind of account.
