Mutual Fund Advisory Programs: What Do They Offer?

Instead of investing in an individual fund, many investors prefer to get involved with mutual fund advisory programs. Mutual fund adviser programs can provide a number of benefits to investors. Here are the basics of mutual fund adviser programs and what they can do for you.

Mutual Fund Advisory Programs

Mutual fund adviser programs are also sometimes referred to as mutual fund wraps. With this type of program, you are working with an advisor that helps you formulate an investment strategy. There are two main types of mutual fund advisory programs. You could choose to get involved in a discretionary or non-discretionary advisory program.

With a discretionary advisory program, you will work closely with a financial advisor in order to determine your personal investment goals. You will then look at a variety of different portfolio options that combine many different mutual funds. Some of the mutual funds could be heavily weighted in equities while others are weighted in fixed income securities. If you decide that you want a mix of 70 percent equities and 30 percent fixed income securities, you could achieve this mix by combining several different mutual funds. Discretionary advisory programs also have automatic rebalancing with the assets in the portfolio. Therefore, as the values of the different assets change, you will not have to do anything to keep the same investment mix.

A non-discretionary advisor program allows you to choose from a list of preapproved funds. You and your advisor will look at the different funds and make each decision individually. You will have to work with your advisor in order to rebalance the portfolio manually as you go.

Professional Management

This type of program gives more investors a way to access professional management. Typically, only accredited investors with significant amount of money to invest or able to benefit from professional money managers. However, with this type of strategy, anyone can take advantage of the benefits of working with a money manager. You can find mutual fund advisory programs that have initial investments as low as $25,000.

Multiple Layers

When investing in a mutual fund advisor program, you will benefit from three different layers of management. First of all, the individual mutual funds will all have managers that are in charge of researching and selecting securities. After that, the program manager of the mutual fund advisory program would represent the second layer of management. They will be in charge of the individual advisory program managers that you will be working with. The advisor program managers will look over your individual portfolio and help you with any necessary changes.

Pooled Funds

Although these accounts are similar to other managed money investments, there is a difference in the way that the assets are held. With many managed money investments, all of the money is held separately in individual investor accounts. With a mutual fund advisor program, all of the assets are pooled together and moved simultaneously.


blog comments powered by Disqus