Sub-Advised Fund

You have some of your money invested in mutual funds at Canuck Fidelity, a firm specializing in investments in Canadian firms. They come to you pitching a new fund they're starting, the G'Day Koala Billybong Down Under Value Equity Fund. It's focused on Australia (in case you couldn't tell; their marketing department is subtle).

You're skeptical. You tell them you think they're great at finding investments in Canada (you made a killing last year on that beaver pelt options strategy they used), but you don't think they're qualified to find good investment opportunities in Australia.

"No worries," they say. "It's going to be a sub-advised fund. We're hiring out to a firm in Sydney to run it for us."

A sub-advised fund exists as part of one management firm. However, it's actually run by someone else. The main investment company uses an outside management team for that particular fund.

So, while the G'Day Koala Billybong Down Under Value Equity Fund is still part of Canuck Fidelity, it doesn't have the same managers as the rest of the company. It has someone from outside (someone who can spot a good investment in high-tech barbies when they see one).