Managed Funds

[Amarillo Slim]

Hey guys,

It seems that a lot of people on the forum here are very active traders so I was wondering if you use managed funds as part of an overall investment strategy that would sort of provide a foundation to your more active trading?

For instance, do people use a managed fund that they make regular contributions to as a type of Automatic Investment Plan type of thing?

I hope I'm making sense and that 'managed fund' isn't a dirty word around here. I was sort of thinking along the lines of kicking a few grand into a fund and making regular contributions whilst also partaking in more active trading exercises. Any opinions/ thoughts on this would be great.

Thanks...AS

 

[Milk Man]

Just remember that most managed funds cant even beat the index. I dunno about everyone else but I would never give my hard earned to an under-acheiver.

 

[sam76]

mate, it'd be safer to put it into an online saver account earning 6%

 

[Smurf1976]

Personally I would go for an index fund rather than a managed fund due to (1) much lower ongoing fees and (2) no problems with key personnel leaving, poor decisions etc. And since the fund simply tracks an index such as the S&P-ASX200 you can very easily keep track of performance - it's even on the TV news.

Whilst it won't beat the index, most managed funds fail to even match it so indexing makes more sense to me unless you are good at picking which managed fund is going to be the winner.

 

[tech/a]

Problem with managed funds is they move like elephants on valium.

It takes weeks for decisions to be reached and stratagies to be implemented.Moving 100s of Millions around a market makes it pretty difficult to out perform it,as these guys en mass are by majority THE MARKET.

They all invest in the SAME growth companies and in similar amounts,those that dont have good and bad years.Anything over 20% is outstanding.If you think about it a bit thats about the best you can expect.

Its not difficult to out run an elephant on valium.

 

[nizar]

Hey guys,

It seems that a lot of people on the forum here are very active traders so I was wondering if you use managed funds as part of an overall investment strategy that would sort of provide a foundation to your more active trading?

For instance, do people use a managed fund that they make regular contributions to as a type of Automatic Investment Plan type of thing?

I hope I'm making sense and that 'managed fund' isn't a dirty word around here. I was sort of thinking along the lines of kicking a few grand into a fund and making regular contributions whilst also partaking in more active trading exercises. Any opinions/ thoughts on this would be great.

Thanks...AS

i have no problems with managed funds...

last year i invested in colonial first state geared aust. shares and made 60%...i basically didnt have any time to do research so i did just that... it gives pretty good distribtions, last year 15c+57c= 72cps, and the units are about 4.30 each... when the market corrected, i just put more money in..

boutique managed funds are also worth a look, underperformed last yr but generally can get in and out of stocks quicker (by definition), and outperform...

manager of that colonial fund i was speaking of left mid-way thru last yr, and performance didnt change at all...

my personal strategy is to invest in blue-chips through this fund, and with extra cash i can invest in more high-return speculative opportunities...

trust me, every1s got their view, but some managed funds have hundreds of millions or maybe even $1billion+ in funds, and all those people who invest, they are not stupid....some billionaires in the states invest in hedge funds.... there must be a reason for that...

if the fees were too high or performance wasnt so good, why is there so much cash in managed funds?

 

[Milk Man]

i have no problems with managed funds...

last year i invested in colonial first state geared aust. shares and made 60%...i basically didnt have any time to do research so i did just that... it gives pretty good distribtions, last year 15c+57c= 72cps, and the units are about 4.30 each... when the market corrected, i just put more money in..

boutique managed funds are also worth a look, underperformed last yr but generally can get in and out of stocks quicker (by definition), and outperform...

manager of that colonial fund i was speaking of left mid-way thru last yr, and performance didnt change at all...

my personal strategy is to invest in blue-chips through this fund, and with extra cash i can invest in more high-return speculative opportunities...

trust me, every1s got their view, but some managed funds have hundreds of millions or maybe even $1billion+ in funds, and all those people who invest, they are not stupid....some billionaires in the states invest in hedge funds.... there must be a reason for that...

if the fees were too high or performance wasnt so good, why is there so much cash in managed funds?

Thats great that you got that kind of yield out of a fund. Remember the phrase 'genius is a bull-market', though. Running the same portfolio through a bear wouldnt do so good id imagine.

There is a reason these funds have so much cash; people are lazy. People also believe that highly paid, university educated, professionals must be able to do better than them. Most people choose this path. Most people retire dependant on the government, a few have enough to live off and give the kids a decent inheritance, very few are wealthy. Is it a good idea then to follow the crowd?

 

[bullmarket]

Hi Amarillo

Hey guys,

It seems that a lot of people on the forum here are very active traders so I was wondering if you use managed funds as part of an overall investment strategy that would sort of provide a foundation to your more active trading?

For instance, do people use a managed fund that they make regular contributions to as a type of Automatic Investment Plan type of thing?

I hope I'm making sense and that 'managed fund' isn't a dirty word around here. I was sort of thinking along the lines of kicking a few grand into a fund and making regular contributions whilst also partaking in more active trading exercises. Any opinions/ thoughts on this would be great.

Thanks...AS

I believe investing in managed funds is a good option for those who for whatever reason either don't have the time, aptitude, temperament etc to do their own research and monitor their investments or want an easy and hassle free way to diversify their investments into various asset classes in addition to shares.

When I was working, I had a portion of my portfolio invested in 3 different managed funds. One was a typical managed fund which invested in local and overseas shares, property, bonds, fixed interest and cash. Another fund invested solely in 'bluechip' international shares and the third invested in local 'emerging' small caps. Overall the perormance the funds was satisfactory for me but not outstanding. The main reason for me investing in managed funds was diversification.

I think everybody will realise that managed funds are a medium to long term investment and so whether you make automatic regular contributions or whenever it suits is solely up to the individual and their personal circumstances.

Nowadays my priorities and objectives are very different to what they were back then and so I currently don't have any investments in managed funds.

The standard disclaimer that past performance is no guarantee of future performance is very true and so imo all I can suggest to minimise risk is to firstly stick to the more reputable fund managers and then make sure you understand what asset classes the fund invests in and what percentage of funds is allocated to each class. And finally compare the funds previous performance (unit price which should be nett of fees) against an appropriate benchmark/index to get a feel for the managers' competancy.

cheers

bullmarket

 

[It's Snake Pliskin]

The main reason for me investing in managed funds was diversification.

I`ll just borrow your line here Bullmarket to make my point - no attack on you.

Diversification or diworsification?

This is what the industry brainwashes people with. Propaganda that diversifying is the answer to your investment prayers. :horse:

 

[bullmarket]

Hi Snake

no problem .....at the time I wanted to invest some funds in international shares as part of my overall risk management strategy for my portfolio. I didn't have the time or inclination to invest directly overseas as it can get messy (in terms of record keeping, tax liabilities, currency fluctuations etc etc) so I decided to take the hassle free way and invest in a managed fund that specialised in overseas shares.

Lack of time along with diversification were also my reasons for investing in the other funds. But during this time I also had direct investments in Australian shares. In the long run my managed funds investments worked out ok

cheers

bullmarket

 

[Amarillo Slim]

Thanks for all the replies so far guys...

It's also good to see arguements for and against the use of funds.

Also with the difference between an Index and Managed fund, I have an account with ComSec but they all seem to only list managed funds in their Direct Funds section. I'm assuming these aren't index funds, so where could I find a list and info for Index funds?

The ones at ComSec, lets say a fund benchmarks against the MCSI World Index ex Aus. does this mean it's an index fund or still a managed fund? The MER's are usually around 2%.

I hope I haven't talked myself into too much of a knot...

Thanks...AS

 

[bullmarket]

Hi Amarillo

Thanks for all the replies so far guys...

It's also good to see arguements for and against the use of funds.

Also with the difference between an Index and Managed fund, I have an account with ComSec but they all seem to only list managed funds in their Direct Funds section. I'm assuming these aren't index funds, so where could I find a list and info for Index funds?

The ones at ComSec, lets say a fund benchmarks against the MCSI World Index ex Aus. does this mean it's an index fund or still a managed fund? The MER's are usually around 2%.

I hope I haven't talked myself into too much of a knot...

Thanks...AS

Imo the best way to find out what type of fund a managed fund is and where/how it invests client funds, is to download a copy of its prospectus and read through it.

If you're looking for index funds specifically you can use the search facility in Commsec's Direct Funds section to search for Index funds by selecting the appropriate investment category in the search function.

Sometimes the name of the fund will also give a hint as to what type of fund it is.

Lots of funds that invest globally, index and non-index, use the MCSI World Index as a bench mark to compare their performance.

Hope this helps.

bullmarket

 

[nizar]

AS

to compare managed funds based on whatever criteria u want, try:

www.morningstar.com.au

and also

www.tradingroom.com.au

after u have found sumthing u like on morningstar....

 

[BSD]

There is a reason these funds have so much cash; people are lazy. People also believe that highly paid, university educated, professionals must be able to do better than them. Most people choose this path. Most people retire dependant on the government, a few have enough to live off and give the kids a decent inheritance, very few are wealthy. Is it a good idea then to follow the crowd?

What crap.

I suppose we should let lowly paid, uneducated plumbers invest for people. Or perhaps every mug in Australia should open a Commsec accout and punt their savings away because 'they know better'.

The people retiring dependant on the government didnt underperform the market by 2% - they didnt invest at all or they opened a commsec account, took no advice and punted their dough into the toilet on tips, graphs or Telstra(!)

Comments like these are the ones that innocents catch at BBQs from the next Warren Buffett encouraging them to do it themselves:

Diversification or diworsification?

This is what the industry brainwashes people with. Propaganda that diversifying is the answer to your investment prayers.?

You dont diversify?

Lemme guess, you cant get 50% per annum if you diversify?

People with real money focus on risk before return. The key for the everyday Joe is to not blow-up his hard earned and spreading it across asset classes, countries, strategies and managers is the best start to staying safe.

Do you trade the Asian, US and European markets directly?
Do you trade government, corporate or colateralised debt yourself?
Do you trade direct commodities and property on your own account?

Or is your entire wealth locked up in the Australian market being managed by one person with very strong ideas? Sounds risky

People win the lotto every week - but it isnt a good way of ensuring financial success.

I am not the biggest fan of much of the industry practice - but the comments above are silly. Without managed funds you are dealing in a very small opportunity set.

 

[bullmarket]

Hi BSD

:iagree: with you.

I essentially said the same things in earlier posts but not in as blunt a way and gave my reasons for investing in managed funds.

have a relaxing evening

cheers

bullmarket

 

[It's Snake Pliskin]

You dont diversify?

Lemme guess, you cant get 50% per annum if you diversify?

People with real money focus on risk before return. The key for the everyday Joe is to not blow-up his hard earned and spreading it across asset classes, countries, strategies and managers is the best start to staying safe.

Do you trade the Asian, US and European markets directly?
Do you trade government, corporate or colateralised debt yourself?
Do you trade direct commodities and property on your own account?

Or is your entire wealth locked up in the Australian market being managed by one person with very strong ideas? Sounds risky

People win the lotto every week - but it isnt a good way of ensuring financial success.

I am not the biggest fan of much of the industry practice - but the comments above are silly. Without managed funds you are dealing in a very small opportunity set.

I be the brightspark, how goes it?

Now we are talking from a trading perspective here. Diversifying is a sound risk managment policy if it is for the purposes of minimising risk and taking advantage of opportunities. This if done in a cunning way will reduce the opportunity cost and effects of diworsification - the practise of diversifying just for the sake of diversifying. A bit like saying if one goes up it`s alright for the other to be not so good. A prevalent attitude.

Try the Japanese markets, in Japanese and yes directly, and ASX, in English -two of the hottest in the past year. :evilburn:

Goodnight

 

[globevestor]

When should you consider funds?

Hey guys,

It seems that a lot of people on the forum here are very active traders so I was wondering if you use managed funds as part of an overall investment strategy that would sort of provide a foundation to your more active trading?

For instance, do people use a managed fund that they make regular contributions to as a type of Automatic Investment Plan type of thing?

I hope I'm making sense and that 'managed fund' isn't a dirty word around here. I was sort of thinking along the lines of kicking a few grand into a fund and making regular contributions whilst also partaking in more active trading exercises. Any opinions/ thoughts on this would be great.

Thanks...AS

I have posted an entry on why use funds. Comments are welcomed.