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#1 2016-01-19 14:47:58

DanielM
Silver Stacker
From: Melbourne
Registered: 2012-10-23
Posts: 2,988
Trades :   31 

Managed funds

As I should be wrapping up my mortgage within the next 2 years I have started thinking about what's next. I know we all love gold and silver hear but I no longer have faith in pm's as a long term play (30-40 years untill I retire). I'm 90% set on an investment property but I was thinking of investing in a managed fund along side it.

So what's some managed funds you guys use?
Straight aussie shares? International shares? Mixed shares?
Balanced funds


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#2 2016-01-19 18:01:42

GoldenEye
Silver Stacker
From: Melbourne, Australia
Registered: 2014-12-30
Posts: 587
Trades :   33 

Re: Managed funds

I like the LICs such as AFI, MLT and ARG. They each have a large variety of shares, very low fees, no gearing and about 5% dividend. They're not very exciting, but you can put all your super in 2 or 3 companies and still sleep at night.

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#3 2016-01-19 19:44:46

BuggedOut
Member
From: New South Wales
Registered: 2015-07-21
Posts: 1,772
Trades :   36 

Re: Managed funds

Why do you want to use a managed fund?

Get an online share trading account and do it yourself.  You can even buy fund shares or international ETFs on the ASX if you want, but it gives you greater control and liquidity for your assets.

Don't feed the beast!

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#4 2016-01-20 03:31:24

whinfell
Silver Stacker
From: Australia
Registered: 2012-03-22
Posts: 3,321
Trades :   44 

Re: Managed funds

Managed funds typically have management fees of 1 to 2% p.a., and may have additional performance fees on top (read the PDS for the fund to check what all the fees are).  Liquidity may be a concern - most funds can only be sold by sending a redemption request to the fund manager, and waiting for them to sell the units and credit your account.

Two alternatives are Licensed Investment Companies (LICs) and Exchange Traded Funds (ETFs); both can be bought and sold on the ASX, just like shares.  LICs also have management fees, around 1 to 1.5%, and may have performance fees as well.   Personally I like CDM and WAM. 

Lastly ETFs generally have the lowest management fees, and in some cases, are an ASX-traded version of the underlying managed fund - for example, most of the Vanguard ETFs are based on the underlying Vanguard managed fund.  Take a look at VAS (Australian shares) and VGS (international shares) and their equivalent managed funds.

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#5 2016-01-20 13:15:07

DanielM
Silver Stacker
From: Melbourne
Registered: 2012-10-23
Posts: 2,988
Trades :   31 

Re: Managed funds

Thanks for opening my options a little. I was thinking about direct shares but have little to no knowledge of buying and selling shares and how fund transfers would work


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#6 2016-01-20 14:11:19

Arsenal
Member
From: Siderney
Registered: 2011-03-18
Posts: 352
Trades :   12 

Re: Managed funds

whinfell wrote:

Managed funds typically have management fees of 1 to 2% p.a., and may have additional performance fees on top (read the PDS for the fund to check what all the fees are).  ......   Personally I like CDM and WAM. 

Lastly ETFs generally have the lowest management fees, and in some cases, are an ASX-traded version of the underlying managed fund - for example, most of the Vanguard ETFs are based on the underlying Vanguard managed fund.  .


WOW WAM.... I bought them from the prospectus at inception and got rid of it a few years later..... do they still have the ridiculous 20% management fee per annum which wipes out any sort of performance on the share? mad

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#7 2016-01-20 14:15:29

DanielM
Silver Stacker
From: Melbourne
Registered: 2012-10-23
Posts: 2,988
Trades :   31 

Re: Managed funds

Arsenal wrote:
whinfell wrote:

Managed funds typically have management fees of 1 to 2% p.a., and may have additional performance fees on top (read the PDS for the fund to check what all the fees are).  ......   Personally I like CDM and WAM. 

Lastly ETFs generally have the lowest management fees, and in some cases, are an ASX-traded version of the underlying managed fund - for example, most of the Vanguard ETFs are based on the underlying Vanguard managed fund.  .


WOW WAM.... I bought them from the prospectus at inception and got rid of it a few years later..... do they still have the ridiculous 20% management fee per annum which wipes out any sort of performance on the share? mad

What are you referring to?


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#8 2016-01-20 16:24:11

whinfell
Silver Stacker
From: Australia
Registered: 2012-03-22
Posts: 3,321
Trades :   44 

Re: Managed funds

DanielM wrote:
Arsenal wrote:
whinfell wrote:

Managed funds typically have management fees of 1 to 2% p.a., and may have additional performance fees on top (read the PDS for the fund to check what all the fees are).  ......   Personally I like CDM and WAM. 

Lastly ETFs generally have the lowest management fees, and in some cases, are an ASX-traded version of the underlying managed fund - for example, most of the Vanguard ETFs are based on the underlying Vanguard managed fund.  .


WOW WAM.... I bought them from the prospectus at inception and got rid of it a few years later..... do they still have the ridiculous 20% management fee per annum which wipes out any sort of performance on the share? mad

What are you referring to?

He's referring to the performance fee that WAM Capital charge when the fund performance exceeds the benchmark index they use (the ASX All Ordinaries Accumulation index, XNT).    See here: http://wamfunds.com.au/WAM-Capital/Prospectus-Fees.aspx .  However, you should also look at the track record of WAM - the gross return was 25.6% last year, and their long term performance since the fund was started averages 18.3% p.a. (gross), see http://wamfunds.com.au/WAM-Capital/Tabs/Overview.aspx .  Even after deducting the regular management fee and performance fees, you'd still be well ahead of the benchmark.

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#9 2016-01-20 20:27:37

petey
Silver Stacker
Registered: 2010-05-18
Posts: 1,149

Re: Managed funds

Definitely look into Vanguard or iShares.

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#10 2016-01-20 20:39:35

bull_bear
Silver Stacker
From: Australia
Registered: 2013-07-16
Posts: 922
Trades :   93 

Re: Managed funds

I would also look into Contago MicroCap.
It's a LIC that focuses on smaller ASX companies (typically between top 100 - 300) also has a handy discount to Net Tangible Assets and pays good divs

Knock yourself out with links below
http://www.morningstar.com.au/s/documen … Report.pdf
http://www.asx.com.au/products/etf/mana … t-list.htm
http://www.morningstar.com.au/LICs/LatestPrices

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#11 2016-01-20 20:52:54

Phiber
Silver Stacker
From: Australia
Registered: 2012-11-21
Posts: 1,651
Trades :   39 

Re: Managed funds

Look into the ETFs VAS and VGS. VAS gives you exposure to the ASX300 and VGS about 1500 companies from developed markets (about 63% US). It gives you instant diversification, super low fee, decent dividend (more so VAS than VGSbecause Aussie shares pay more dividends) and a super simple accounting come tax time : you receive one statement for each, and that's it. Both also have dividend reinvestment plans so you can let the dividends compound over the long term. VGS also has an equivalent with currency exposure hedged called VGAD.

But the most important is for you to look into the concept of index investing as opposed to direct shares picking. It has been proven over the long term the index beats the vast majority of managers, meaning if you select some shares yourself, you are unlikely to do better than the index, over the long term. The other great thing about index investing is the fact that if a company rises - say because they have discovered a new vaccine/mine/technology - it automatically gets added to your holdings, since the ETF reflects the market index. And it also works the other way around: when a company fails, your holdings of it diminue until you don't have any because it's not in the index anymore.

Both these ETFs are with Vanguard, certainly one of (if not the one) big player in this sphere.
Vanguard's website has some good materials on it around education and I suggest you look into buffet's videos and listen to Bogle: he's the dude behind vanguard and one of the guys who has shown what index investing can do.

If you go down that way, you need to remember that for this to work, you have to let time work for you: that is not sell when the market tanks, else you are simply crystallising your losses. The good about this is that you still get paid dividends and if you reinvest them it helps grow your assets and compounding works it's magic. So even when the market tanks, you are still being paid for holding the asset.

Lastly, the large and old LICs (AFI, ARG, MLT) are great - however be aware and careful: these usually trade at a premium to their NTA (basically intrisic value of their holdings). For instance when I last checked ARG, it was trading at an 11% premium, which means you are paying 11% more than what the underlying shares are valued at. The great thing about LICs though is that sometimes - rarely but sometimes - they can trade at a discount which is then a fantastic buy. What a lot of investors do is check the premium and if too high, simply buy the index (VAS).

Good luck!

Last edited by Phiber (2016-01-20 20:54:04)


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