Why are managed funds so popular?

Around 1.2 million people in Australia have part or all of their investments in managed funds*. So why are they so popular?
1. It's easy to diversify your investments - you have access to different asset classes, companies, industries, sectors and countries.
2. Experts manage your money - the qualified investment professionals managing your money have access to information, research and robust investment processes not easily available to individuals.
3. It's easy to reinvest your investment earnings - and take advantage of compounding. Over 20 years, this compounding effect could mean a huge difference in your investment returns.
4. It's easy to set up a regular investment plan - you can choose small monthly or weekly amounts and transfer your payments on the day you get paid - a strategy also known as 'pay yourself first'.
5. You can invest for income, growth or both - the returns you get from a managed fund usually come in two forms. Income (paid to you as a 'distribution') and capital growth (achieved only when the unit price increases in value).
6. You can start investing with as little as $1,000 - depending on the fund. Investing in a range of shares or a property often involves large sums of money, and sometimes a large loan. Managed funds allow you to access certain investments at a fraction of the usual cost. This is because you share these costs with other members of the fund rather than having to pay the minimum investment fee on your own.