“Managed funds have had a tough couple of years as global markets tumbled. Do they still have a place for investors, and what is it?”

You want a tough couple of years? When Cold Chisel split – that was a tough decade for an 80s Australian teenager.

The rough patch for managed funds only reflects the difficulty in all investment markets. It hasn’t been a bed of roses for anyone in direct equities or property anywhere on the planet.

Managed funds are simply an investment structure (like super is a tax structure). On average, a managed fund will have only done marginally worse than a similar portfolio of direct stocks, that difference being its management expense ratio (MER), usually between 0.3 and 2.5 per cent.

The reasons to use managed funds haven’t changed. If you don’t have the time to monitor your investments, love paperwork as much as visiting the dentist, want instant diversification, want professional managers (so you don’t fumble around like it was your first time in the sack), are investing a small amount, or want access to overseas markets, then managed funds are cheap investing.

Many Gen Xers feel confident enough to monitor an Australian equities portfolio.

But how much do you know about direct investing in Latin America, Asia, the US or Europe? About as much as Miley Cyrus’s dad, Billy Ray, knew about good lyrics (Achy Breaky Heart) and socially acceptable hairstyles (that mullet) in the 90s?

Funds don’t have to be expensive. Index funds, such as Vanguard, can give the equities exposure needed for a tiny cost.

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser.