Research & Insights

Why invest in actively managed funds?

If you’re looking to make a potentially higher return on your investments than a fund that tracks an index, investing in a fund that’s actively managed by financial professionals might be suitable for you.

What are actively managed funds?

With actively managed funds, a fund manager or team of fund managers buys and sells investments aiming to outperform the market or a particular benchmark. This is opposed to passive funds, such as index-tracker funds, which aim to mirror or track a particular market or sector.

How do they work?

An expert fund manager and their team carry out research to pick the fund’s investments. They will make decisions about both the overall strategy and balance of the fund, such as what proportions to invest in which sectors or countries or, for an equity fund, picking shares in individual companies.

Who are these funds suitable for?

  • Investors looking to make a potentially higher return on their investments than a fund that tracks an index and who are willing to take more risk to achieve this.
  • Investors who want a fund manager who actively seeks to outperform the market or sector.
  • Investors looking for growth and/or income potential over the long term.
  • Investors who already have tracker funds and may also want to have an actively managed element within their portfolio that gives them the chance of higher returns.
  • Investors looking to diversify their portfolio with a range of funds.

What are the advantages of actively managed funds?

  • When investing in an actively managed fund, you can leave it to the experts to make the decisions for you.
  • Access to different types of assets, industry sectors and markets.

Any downsides?

  • Some of our actively managed funds invest in a niche sector or region and therefore have a greater potential to underperform against the market/benchmark.
  • They have higher fees than passive funds, due to the fund being managed by a team or fund manager.

To balance risks, it can be beneficial to invest in actively managed and index-tracker funds as part of your portfolio.

What’s the minimum investment?

  • Minimum lump sum investment of £500.
  • Regular investments: from £30 a month for a Junior ISA or from £50 a month for unit trusts and adult stocks and shares ISAs.
  • You can also top-up your investments from £100 at any time.

What's the minimum investment period?

There is no minimum investment period, but you should consider your investment to be medium to long-term, ideally five years or more.

Why invest with Legal & General?

  • Initial fee discounted to 0% and no withdrawal fee, when you invest directly with us. Other charges apply.
  • Legal & General is one of the UK’s leading financial services companies. As at 30 June 2016, the total value of assets across the group was £841.5 billion, including derivative assets.

Important information

  • Please remember the value of an investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.
  • The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.
  • Although there is no fixed term, you should consider an ISA or unit trust investment to be medium to long term, ideally five years or more.
  • The funds may invest overseas. Changes in exchange rates between currencies may cause the value of an investment and the level of any income to rise or fall.
  • Each trust has its own individual risks detailed in the individual 'Key Investor Information' documents. More general information can be found in 'A guide to investing with us'. Before you decide to invest you must read these documents.
  • Our Junior ISA has its own 'Terms and conditions' and'A guide to investing in a Junior ISA with us'. Further information on how to invest can be found on our Junior ISA page.

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