Trading vs. Managed Funds

[Digger]

G'day all,

Just wanted to ask those of you out there who have a bit more experience in trading than me (ie. all of you!) what sort of returns you acheive on a consistent basis. How much better off am I trading shares, as opposed to putting the money in managed funds and sitting on the beach somewhere.

Cheers
Digger

 

[JetDollars]

Re: Trading vs Managed Funds

Digger,

Welcome to the forum.

Honestly, I been trading the share market in '99, '00 during the tech booms, but I have been trading since. I only start learning the market a few months ago and I feel that trading will make more money than putting money in the managed funds if you kno what you are doing.

But remember trading will also lossing money quickly as well.

I have money in managed funds at the money, once I confident enough I take some out and start trading..

Good luck, but knowledge is the keys to successful invesitng/trading...

 

[still_in_school]

Re: Trading vs Managed Funds

Hi Guys,

IMHO, i wouldnt bother with managed funds, if your looking for return on your money vs risk...

the reason being is, for eg...

average manage fund... about 5-6%

3% goes to inflation
2% goes to fees
the interest incurred or profit is then taxed... leaving almost no earnings made...

problem with managed funds, is also they are too diversitfied, their market risk level, is that they are too exposed, as many of the manage fund managers over-diversify, than instead of holding a few good strong stock, that will have good capital growth, in the short and long term...

best to stick your stocks into some good bluechips or even invest wholey in the ASX top 20, and you will find, your portfolio, will beat 80% of manage funds and manage fund managers...

Cheers,
sis

 

[Digger]

Re: Trading vs Managed Funds

Thanks for the replies, guys.

I hear what you're saying sis. To try and put some very rough numbers on it, if you look at the All Ords over the last 20 years, it has averaged a return of 9% pa. So I would hope that would be the minimum return from any sort of investment, whether it's managed funds or trading.

Some of the books I've read have said it's not unreasonable to aim for returns of 20-30% pa from trading, and some of the systems I've backtested have earned 50+%. I just don't know if these returns are possible in real life. I'm guessing probably not.

Cheers
Digger

 

[still_in_school]

Re: Trading vs Managed Funds

Hi Digger,

it really depends, on how active and how often you manage your portfolio....

A good book to read is... "How to beat manage funds by 20%"

the book isnt too detailed, but it will show you consistencey of profits, made, locked in, and reinvested... like the title, how to beat the funds by 20%, but the book lacks showing you strategies, but is quite good for investors psychology.

Cheers,
sis

 

[positivecashflow]

Re: Trading vs Managed Funds

Hey guys,

What do you think of capital guaranteed hedge funds? As a starting point in my investment portfolio I invested some money into this type of fund. It aims for a 15% return, with a $1.30 guarantee at maturity for every $1.00 invested. I haven't seen a positive month for nearly a year. Is it time to pull out or should I wait and bide my time?

Regards,

J.

 

[JetDollars]

Re: Trading vs Managed Funds

Hey guys,

What do you think of capital guaranteed hedge funds?  As a starting point in my investment portfolio I invested some money into this type of fund.  It aims for a 15% return, with a $1.30 guarantee at maturity for every $1.00 invested.  I haven't seen a positive month for nearly a year.  Is it time to pull out or should I wait and bide my time?

Regards,

J.    

I alway believe with this type of funds as well as managed funds are for a long term investment, therefore by monitoring your investment regularly does not really help you in anyway because you will only see how slow the funds will growth.

As you mentioned that you haven't seen a positive month it does not mean the funds won't return positive in the future.

I suggest if you can invest/trade it better with your money somewhere than I would pull out, otherwise by investing there will give you more chance of making money.

The reason I invest in managed funds because I took a long term view for my child education when she turn 18. So for me it will be an 18 years investment. ie. long term.

 

[positivecashflow]

Re: Trading vs Managed Funds

Hi Jet$,

The fund I invested has a 12 year term, so you can say that it is a long term investment. I guess its a "nest egg". I am certainly not relying on it to accelerate my wealth creation. I cannot buy any more units in the fund as it is a once off subscription.

Has anyone invested in an Australian small caps fund? I would like to know others thoughts.

Regards,

J.

 

[Baloo]

Re: Trading vs Managed Funds

I think you need to do as much research on funds as you do with Stocks. Too many people just pick the best performing fund of the last year and think it'll play well. You need to know what their philosophy is, who the fund managers are and study their past behaviour when the markets have turned sour.

I have a couple of funds I am in. One is a microcap which has gone ok, another shorts the market as well as chasing the traditional CG/Yield.

I see them as an eachway bet as opposed to direct equity where the betting is on the nose. So far I am comfortable with my strategy and it's paid dividends