# Best investment manager/fund performance



## graexx (19 September 2012)

Hi all

*The goal*
I am retiring this year, and obviously want to maximise my return - the funds are mostly in pension phase in an SMSF (simply means all returns are tax free and I can invest almost anywhere except overseas property).

*The problem*
There is so much data and conflicting opinions about where and what to invest in - I'm overwhelmed.

*Please help*
Do you have any opinions and data on which investment recommendation sites or mutual funds have the best performance track record?

e.g. I've been watching the Catholic Super Fund over the past 10 years:
http://www.csf.com.au/2011-performance 
and am considering letting them have my money - but want to consider others as well.

Any opinions about Clime or the Small Cap Fund in the MorningStar website, or others??

Or other strategies in equities, subordinated notes etc  - but not freehold property holdings.

I don't want to spend more than about 8 hours per week maintaining my investments

Thanks 

Graeme


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## prawn_86 (19 September 2012)

graexx said:


> I don't want to spend more than about 8 hours per week maintaining my investments




Welcome to ASF Graexx

Unfortunately there is no magic bullet. If you are to take full control of your investments, at 8 hours a week, it is going to take about 24 years for you to get the 10000hours that is given as a rough guide to becoming an expert.

Another way of looking at it is if you earn $30 an hour then 8 hours is $240 before tax, so can you get someone to do it for this price per week or cheaper? Or if not cheaper, are they going to manage your money in a way that is better than you would? You run a smsf so i assume you have some basic investing experience? Are you looking for growth or yeild? Why managed funds? Perhaps you should look at a LIC

Legally ASF members are not allowed to issue investment advice, but they may be able to point you towards websites which rank fund performances etc.


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## robz7777 (19 September 2012)

Hi Graeme, 

I think the first question needs to be 'what return do I need to get to fund my lifestyle'... ie. Are you going to be happy leaving nothing for the kids (if you have any) at the end of the day? You may be in a position avoid investing in volatile assets such as a small companies fund. 

There is an extensive thread on ASF which covers the Storm Financial story, a number of retirees with more than sufficient capital to retire comfortably were left with little due to the recommendations of Storm advisers to use leverage to 'maximise returns'

Then: 
- Do you need the SMSF and associated costs/time to achieve this?
- Are you maximising an benefit you may receive from the Gov't? 

Hope that helps a little!


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## graexx (19 September 2012)

Thanks to those who have replied with their general advice about approaching investing.

Now I would like any specific opinions (and data if possible) on the funds or investment websites with the best equity performance track records.
An example might be where someone has had good success adopting the buy recommendations from MorningStar (if they have).


Thanks so much

Graeme


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## Julia (19 September 2012)

robz7777 said:


> Hi Graeme,
> 
> I think the first question needs to be 'what return do I need to get to fund my lifestyle'... ie. Are you going to be happy leaving nothing for the kids (if you have any) at the end of the day? You may be in a position avoid investing in volatile assets such as a small companies fund.
> 
> ...



+1.  Much depends on your level of capital.  e.g. if you have several million you can just be very conservative and allow interest on cash deposits to fund your cost of living.   But if you need to generate the same level of income from just a few hundred thousand you're going to have to work harder for it.

You seem to indicate that, although you have a SMSF, you don't actually have the confidence to directly invest the money and assume you will hand over to some organisation/managed fund.

As robz suggests above, do have a look at the Storm thread for an idea of what can happen when you relinquish responsibility to an organisation whose prime focus is going to be their own profitability rather than yours.

Have you had experience, either within or outside your SMSF of investing in the sharemarket?


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## graexx (19 September 2012)

Hi Julia
Yes, I have invested in equities at various times in the past, and have been a fixed interest investment manager in a past life - all options to investing are open to me.

I understand about lifestyle and leaving enough for the kids, and risks such as the losses at Storm etc,.. - please take that as a given.

What I'm after is that specific info about the track records about recommendations on such sites as MorningStar, or any specific mutual funds that I'm interested in (as part of my research).

I'm also looking at Berkshire Hathaway as a set and forget option.

Thanks so much

Cheers


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## Judd (19 September 2012)

graexx said:


> Hi Julia
> Yes, I have invested in equities at various times in the past, and have been a fixed interest investment manager in a past life - all options to investing are open to me.
> 
> I understand about lifestyle and leaving enough for the kids, and risks such as the losses at Storm etc,.. - please take that as a given.
> ...




Warren Buffet and Charlie Munger are without doubt excellent investors but I personally would not place one cent with them.  No income.


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## graexx (19 September 2012)

Judd said:


> Warren Buffet and Charlie Munger are without doubt excellent investors but I personally would not place one cent with them.  No income.




Hi Judd
Understand your view - but I would be happy to periodically take the capital profits (if cashflow requires it) and go with the great return.

Out of interest, why is income critical to you (perhaps I'm missing something)?

Cheers
Graeme


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## Gringotts Bank (19 September 2012)

If you know any multis, ask them.  Their highly paid advisors seem to always get them into the best funds, whether they are based here or O.S.


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## prawn_86 (19 September 2012)

graexx said:


> Out of interest, why is income critical to you (perhaps I'm missing something)?




If you are retiring isn't income a fairly important part (the major part) of what you require from your investments? If you are not working where will your regular money be coming from?

Remember if you invest in an overseas stock you are also exposed to currency risk on top of all the other associated risks


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## graexx (19 September 2012)

Gringotts Bank said:


> If you know any multis, ask them.  Their highly paid advisors seem to always get them into the best funds, whether they are based here or O.S.




Thanks Gringotts Bank
Pardon my ignorance: what's a multi?

Thanks 
Graeme


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## graexx (19 September 2012)

prawn_86 said:


> If you are retiring isn't income a fairly important part (the major part) of what you require from your investments? If you are not working where will your regular money be coming from?
> 
> Remember if you invest in an overseas stock you are also exposed to currency risk on top of all the other associated risks




Hi Prawn_86
I've always thought total return (as opposed to income/dividends) is what counts, because I can always sell and then immediately buy back in to cash in gains (if and when I need the cash).

Am I missing something

You make a good point about the forex risk, and as I said to a friend today, who knows where the $A is going - t's just that at the moment the US economy and US interest rates have no where to go but up relative to the Aus economy and Aus interest rates - but the risk is always there.


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## prawn_86 (19 September 2012)

graexx said:


> Hi Prawn_86
> I've always thought total return (as opposed to income/dividends) is what counts, because I can always sell and then immediately buy back in to cash in gains (if and when I need the cash).
> 
> Am I missing something




What happens if there is a capital loss when you need to sell out? 

I assume you would only sell a portion to cover your living costs each time you needed funds? If you are selling each week then you are hugely exposed to market risk and stock specific risk all without an income yield. Not to mention increased transaction fees.

If you are focusing on total return, then it is essentially broken down into shorter term trading as to when you need income (weekly or fortnightly). If you want to trade short term, managed funds are not for you, and you will need more than 8 hours a week to learn it 

What you have suggested seems hugely innefficient


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## tech/a (19 September 2012)

prawn_86 said:


> If you are retiring isn't* income a fairly important *part (the major part) of what you require from your investments? If you are not working where will your regular money be coming from?
> 
> Remember if you invest in an overseas stock you are also exposed to currency risk on top of all the other associated risks




You must be able to have surplus to keep ahead of inflation.
Most dont consider this.
If you retired 25 yrs ago $500K was a considerable sum.
Today it is unfortunately nothing. Today youd have little if anything left.

If your needing 70K to live as you do now youll need around $1.2 mill at 6%
If you need less then you have a chance of lasting (Financially) 25 yrs +
If not your snaffle.
Only using your equity in your home later in life or leaving very little left will
save you--then of course if you need nursing home care----blah blah.

Getting OLD has hair on it!
Im definately rebelling.


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## prawn_86 (19 September 2012)

tech/a said:


> You must be able to have surplus to keep ahead of inflation.
> Most dont consider this.




Of course. If you are making surplus in your income componenet you can reinvest it to keep pace with inflation. I guess for those retiring the ultimate investment would be something that keeps pace with inflation capital wise and pays an income also increasing at or above inflation


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## graexx (19 September 2012)

tech/a said:


> You must be able to have surplus to keep ahead of inflation.
> Most dont consider this.
> If you retired 25 yrs ago $500K was a considerable sum.
> Today it is unfortunately nothing.
> ...




Hi Tech/a
Thanks for your comments.

Yes there'so getting past the need to account for inflation when judging the retirees remaining cash requirements.

Personally it will be a lot easier for me because (aside from other factors) living on a tropical beach in the Philippines (Puerto Gallera) is quite (no, extremely) cheap. 

cheers


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## graexx (19 September 2012)

prawn_86 said:


> What happens if there is a capital loss when you need to sell out?
> 
> I assume you would only sell a portion to cover your living costs each time you needed funds? If you are selling each week then you are hugely exposed to market risk and stock specific risk all without an income yield. Not to mention increased transaction fees.
> 
> ...




Hi Prawn_86

I take your point about capital losses, but that doesn't change the principle that total return not income is all that counts, because I can always part sell - and the profits or losses are unaffected - remember, when in pension mode, the pensioner must draw a set pension based on their living needs.

Your point about trading: If I head up the trade-myself option, will not trade beyond a few hours a week because it doesn't take that long to execute trades and stops once you have your process/strategy set (it's only one portfolio and I will only check the recommendations/analysis twicea week - mind you, I will use stops based on moving averages, therefore the downside risk [the foregone opportunities] is minimal).

Is my logic faulty?

Which brings me back to the whole reason I raised this thread - should I trade it myself, or give it to a good investment fund - and the comments and questions everyone is raising are helping.

Regards

Graeme


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## graexx (19 September 2012)

Julia said:


> +1.  Much depends on your level of capital.  e.g. if you have several million you can just be very conservative and allow interest on cash deposits to fund your cost of living.   But if you need to generate the same level of income from just a few hundred thousand you're going to have to work harder for it.
> 
> You seem to indicate that, although you have a SMSF, you don't actually have the confidence to directly invest the money and assume you will hand over to some organisation/managed fund.
> 
> ...




Hi Julia
Yes the Storm Financial fiasco was a tragedy. My uncle and auty lost a large sum in Perpetual Trustees back in the early 90s - similar to Storm in that it was geared property investments, with unprincipled people behind it. 
Also I used to work for a large listed property fund manager (Orchard Funds Mgt) - in short I wouldn't put my money in that area, and certainly not with the likes of a shoddy (by all accounts) company like Storm.

Property (other than owner-occupied residential) does not interest me - and there seems to be so many people of questionable repute drawn to it.

Regards

Graeme


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## Gringotts Bank (19 September 2012)

graexx said:


> Thanks Gringotts Bank
> Pardon my ignorance: what's a multi?
> 
> Thanks
> Graeme




Someone with a lot of money (multi-millionaire).  They get all the good deals.  

Bank managers, brokers and financial advisers fall over themselves trying to impress, going to great lengths to have them on their books.

I'm guessing a limitation would be that some of these funds will be closed to plebs and those of moderate income.


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## graexx (19 September 2012)

Gringotts Bank said:


> Someone with a lot of money (multi-millionaire).  They get all the good deals.
> 
> Bank managers, brokers and financial advisers fall over themselves trying to impress, going to great lengths to have them on their books.
> 
> ...



Ok  i think i'll contact some well heeled mates

That's just the advice i'm after

Thanks


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## Julia (19 September 2012)

graexx said:


> Hi Julia
> Yes, I have invested in equities at various times in the past, and have been a fixed interest investment manager in a past life - all options to investing are open to me.



Then I'm somewhat surprised at your questions.  If you've been any sort of investment manager I'd have thought you'd be well and truly across the various investment options.
This isn't meant as criticism.  I'm just surprised.



> I'm also looking at Berkshire Hathaway as a set and forget option.



Imo there should never be any such option.  You always need to monitor any investment.



prawn_86 said:


> What happens if there is a capital loss when you need to sell out?
> 
> I assume you would only sell a portion to cover your living costs each time you needed funds? If you are selling each week then you are hugely exposed to market risk and stock specific risk all without an income yield. Not to mention increased transaction fees.



+1.   Most people in pension phase of a SMSF will have longer term investments *separately from enough funds at call to supply living income for about three years.*
To expose yourself to a potential capital loss as Prawn has described above would be asking for trouble, and is quite unnecessary.


> What you have suggested seems hugely innefficient



Agree.



tech/a said:


> You must be able to have surplus to keep ahead of inflation.



+1.  Plus to allow for unexpected capital expenses over and above everyday living costs.
Most dont consider this.


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## Julia (19 September 2012)

graexx said:


> - remember, when in pension mode, the pensioner must draw a set pension based on their living needs.



That's not correct.  It is not based on your living needs.  It is based on your capital, your age, and your life expectancy.  Consequently many retirees are obliged to pay themselves considerably more in income than they actually need.  There are significant penalties if you do not get this right.  It's a basic tenet of running your own SMSF.



> Which brings me back to the whole reason I raised this thread - should I trade it myself, or give it to a good investment fund



How will you determine what is a 'good investment fund'?  
No one will have your interests at heart as much as you do yourself.

There's something about this thread which feels odd to me.  If you have been an investment manager, and if you have an established SMSF, I'd have expected you to have already clear views about the sort of thing you're discussing.   No obligation to tell us, of course, but I'd be interested to know how long you have been running your SMSF, if you have conducted it without assistance, what sort of strategies you have employed, and what sort of returns you've achieved.

I don't mean to be intrusive and will quite understand if you choose not to answer this.


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## prawn_86 (19 September 2012)

Julia said:


> There's something about this thread which feels odd to me.




Yep my troll sense is tingling and as such i wont be commenting further


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## graexx (19 September 2012)

Julia said:


> That's not correct.  It is not based on your living needs.  It is based on your capital, your age, and your life expectancy.  Consequently many retirees are obliged to pay themselves considerably more in income than they actually need.  There are significant penalties if you do not get this right.  It's a basic tenet of running your own SMSF.
> The point is that I, as a pensioner, will draw the amount I need to live on.
> 
> 
> ...




qqq


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## Julia (19 September 2012)

graexx said:


> The point is that I, as a pensioner, will draw the amount I need to live on.
> 
> qqq



So, if the rules say you are required, on the basis of your age, capital and life expectancy, to draw a pension income from your SMSF of $50,000, and you only need $20,000, you will ignore the rules of running a SMSF.
Good luck with that.


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## graexx (20 September 2012)

Julia said:


> So, if the rules say you are required, on the basis of your age, capital and life expectancy, to draw a pension income from your SMSF of $50,000, and you only need $20,000, you will ignore the rules of running a SMSF.
> Good luck with that.





You have a wonderful aptitude for getting off topic haven't you.
Gringbott told me something on topic which added value.

You clearly haven't actually drawn a pension, otherwise you wouldn't take such a dogmatic arguamentative approach (you aren't reading between the lines).

Please do not reply further.


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