Timing of investing into a managed fund

[DionM]

As part of a good, balanced investment portfolio I've been wanting to invest into a managed fund.

However, how do funds distribute profits (and losses, given the current market) around their holders.

For example, we've just off the back of a some major down times on the market. If I were to put my $10,000 into a managed fund today - and say the market goes up again - would my balance go up - or would there be some sort of delay or indeed a distribution of the losses incurred recently, which would affect my balance?

I guess what I'm trying to ask is - like picking the bottom of share prices, is there an 'art' of picking bottoms of when to buy into a managed fund? Does all the money just go into a big bucket, or is each individual contribution marked against it's own bit of "earnings" (for want of a better word).

 

[ROE]

Dont try to time the market but time in the market is what it counts

Be not afraid of going slowly, be afraid of standing still

 

[Nyden]

As part of a good, balanced investment portfolio I've been wanting to invest into a managed fund.

However, how do funds distribute profits (and losses, given the current market) around their holders.

For example, we've just off the back of a some major down times on the market. If I were to put my $10,000 into a managed fund today - and say the market goes up again - would my balance go up - or would there be some sort of delay or indeed a distribution of the losses incurred recently, which would affect my balance?

I guess what I'm trying to ask is - like picking the bottom of share prices, is there an 'art' of picking bottoms of when to buy into a managed fund? Does all the money just go into a big bucket, or is each individual contribution marked against it's own bit of "earnings" (for want of a better word).

I guess the best way to time the market would be to buy into a listed index fund, as opposed to a managed fund.

STW - a stock you can buy on market for standard brokerage, is essentially this. It pays its distribution as dividends as per any normal company & It follows the ASX 200 I believe.

I'll personally be buying into this next week, it's the only market exposure I'm willing to gamble with at the moment. The way I see it, a major market crash like Tuesday, would only hurt me by 10%, as opposed to some of the heavier losses I took :

 

[Julia]

Dion, you probably need to ask the question of the Fund in which you are considering investing. They will probably take some days to process your holding so trying to time it would seem pretty difficult.

It's some years since I had managed funds, but they work by allocating each investor a given number of units depending on the $ invested. So if you have,say, 100 units which today were worth $1 per unit, and then the market dropped tomorrow 10% then your unit would be worth 90c.

Have you considered investing directly rather than paying the fees involved in managed funds?

 

[roland]

I have some capitol invested in Colonial First State, there are quite a few funds to choose from. It's really not unlike the stock market and you can go online and choose to add extra capitol on dips.

Personally I feel that adding a managed fund adds to a balanced portfolio

 

[Nyden]

I have some capitol invested in Colonial First State, there are quite a few funds to choose from. It's really not unlike the stock market and you can go online and choose to add extra capitol on dips.

Personally I feel that adding a managed fund adds to a balanced portfolio

Yes, but there's fees there right? STW You can buy on market, it tracks the ASX, & no fees (auto taken out of distrubtions I believe)

 

[roland]

Yes, but there's fees there right? STW You can buy on market, it tracks the ASX, & no fees (auto taken out of distrubtions I believe)

Wow, Nyden you are everywhere

The fees generally tend to be less than brokerage if you are a trader. Add to this that you are more unlikely to withdraw. The idea with a managed fund is long term, bit like a super fund - all dividends are rolled back in. 5 year returns are averaging in excess of 50% - try to get that from ING

Also, if a a market sector declines, it takes a couple of clicks to move from geared shares to real estate or something else

 

[Nyden]

Wow, Nyden you are everywhere

The fees generally tend to be less than brokerage if you are a trader. Add to this that you are more unlikely to withdraw. The idea with a managed fund is long term, bit like a super fund - all dividends are rolled back in. 5 year returns are averaging in excess of 50% - try to get that from ING

Also, if a a market sector declines, it takes a couple of clicks to move from geared shares to real estate or something else

Well, that Index fund can be long term as well. I'm sure with the ASX doubling over the past few years, the returns are pretty strong there too.

I like the appeal of the freedom of it; should it be obvious that we're going to crash / correct, I can pull out / re-enter.

Yes, I am everywhere

 

[roland]

Well, that Index fund can be long term as well. I'm sure with the ASX doubling over the past few years, the returns are pretty strong there too.

I like the appeal of the freedom of it; should it be obvious that we're going to crash / correct, I can pull out / re-enter.

Yes, I am everywhere

I can pull the Colonial fund anytime I like, there are no restriction on entry and exit

 

[Judd]

STW - a stock you can buy on market for standard brokerage, is essentially this. It pays its distribution as dividends as per any normal company & It follows the ASX 200 I believe.

The only slight difference is, when I read the full details on the website, is that you have to include the distributions in the year they were earned and not received. For example, if you receive a distribution on 2 July, the income has to be declared in your income tax for the previous tax year. STW has low internal management costs of 0.29% of the assets. There are also some funds like Vanguard, which have a variety of index funds both Australian or international. And there are the recent iShares listed on the ASX.

Two website. Just for info and not promoting as it's your choice

http://www.vanguard.com.au/

http://www.asx.com.au/investor/lmi/types/etfs/index.htm

It is now certainly possible to mix and match. Apart from international index funds, wife and I no longer have any mainstream unlisted funds because they charge high fees, most turn out to be quasi index trackers and while some may be the rooster in one year, the next they turn out to be the feather duster.

 

[Rogue Trading]

Nyden,
Can you give me more information on STW please? Does one buy shares in STW or units? When does one receive dividends? How long has STW been listed? Are STW geared in any way? So there is never any margin call?
What is the min. parcel size on STW?
STW sounds like a good way to trade the index on the long side at a reasonable price. This something I was trying to find out on a different thread so you have helped me a lot.
Thank you for your help.
Regards.
Rogue Trading

 

[Judd]

Nyden,
Can you give me more information on STW please? Does one buy shares in STW or units? When does one receive dividends? How long has STW been listed? Are STW geared in any way? So there is never any margin call?
What is the min. parcel size on STW?
STW sounds like a good way to trade the index on the long side at a reasonable price. This something I was trying to find out on a different thread so you have helped me a lot.
Thank you for your help.
Regards.
Rogue Trading

RT, go to the ASX web site listed in previous post and follow the links. Heaps better info there and you can read at your leisure.

But as well here is link for the Company Search in respect of STW on the ASX

http://www.asx.com.au/asx/research/...panyName=&principalActivity=&industryGroup=NO

 

[Rogue Trading]

Judd,
Thanks very much for the link.
Regards.
Rogue Trading

 

[Nyden]

Judd,
Thanks very much for the link.
Regards.
Rogue Trading

Hello there Rogue (Hope you're not the rogue who caused our little melt down! I jest : )

Did the ASX site answer all of your questions? If not, please feel free to ask here as to any that remain unanswered.

 

[Rogue Trading]

Hi Nyden,
I am really a Rogue Traders fan hence the nickname. But it doesn't hurt to get people thinking. Your link to the asx was very helpful thank you.
Regards.
Rogue Trading

 

[krisbarry]

As part of a good, balanced investment portfolio I've been wanting to invest into a managed fund.

However, how do funds distribute profits (and losses, given the current market) around their holders.

For example, we've just off the back of a some major down times on the market. If I were to put my $10,000 into a managed fund today - and say the market goes up again - would my balance go up - or would there be some sort of delay or indeed a distribution of the losses incurred recently, which would affect my balance?

I guess what I'm trying to ask is - like picking the bottom of share prices, is there an 'art' of picking bottoms of when to buy into a managed fund? Does all the money just go into a big bucket, or is each individual contribution marked against it's own bit of "earnings" (for want of a better word).

Timing is everything, some mananged funds run 1 day behind the market and others up to 3 days. So given the crash we have just had it would be wise to get your money in straight away. Lets say the fund is $1 a share, and we get a 20% correction, then the funds share price ends up being 0.80 cents, so effectively you are buying more units per every dollar at 80 cents, than you are a $1.

So again if you placed your $10,000 into the market this week and over the next 2 months the market goes up 10%, you will have approx $11,000 minus fees

 

[krisbarry]

Below is an example of the fund I am in and what has happened to the share price over the past few weeks. Buying in on the 22/1/08 would have been nice.






**Date ****Entry ****Exit

24/01/2008 0.8500 0.8432
23/01/2008 0.8137 0.8070
22/01/2008 0.7598 0.7532
21/01/2008 0.8517 0.8448
18/01/2008 0.8920 0.8850
17/01/2008 0.9029 0.8958
16/01/2008 0.9029 0.8963
15/01/2008 0.9395 0.9323
14/01/2008 0.9470 0.9397
11/01/2008 0.9476 0.9403
10/01/2008 0.9677 0.9603
09/01/2008 0.9703 0.9629
08/01/2008 0.9854 0.9779
07/01/2008 0.9948 0.9873
04/01/2008 1.0275 1.0202
03/01/2008 1.0252 1.0179
02/01/2008 1.0418 1.0344
31/12/2007 1.0400 1.0326
28/12/2007 1.0414 1.0340
27/12/2007 1.0454 1.0379
24/12/2007 1.0394 1.0320
21/12/2007 1.0209 1.0135
20/12/2007 1.0034 0.9960
19/12/2007 1.0120 1.0045

 

[Nyden]

The only slight difference is, when I read the full details on the website, is that you have to include the distributions in the year they were earned and not received. For example, if you receive a distribution on 2 July, the income has to be declared in your income tax for the previous tax year. STW has low internal management costs of 0.29% of the assets. There are also some funds like Vanguard, which have a variety of index funds both Australian or international. And there are the recent iShares listed on the ASX.

Two website. Just for info and not promoting as it's your choice

http://www.vanguard.com.au/

http://www.asx.com.au/investor/lmi/types/etfs/index.htm

It is now certainly possible to mix and match. Apart from international index funds, wife and I no longer have any mainstream unlisted funds because they charge high fees, most turn out to be quasi index trackers and while some may be the rooster in one year, the next they turn out to be the feather duster.

Judd, I actually have a question here with regards to STW!

Do you know if their distributions count as income tax as per normal dividends, or do they count towards CGT (ie able to be offset against capital losses), as they're basically Fund Distributions?

Just not sure on the stance here, with regards to any EFT I guess.

 

[Judd]

Do you know if their distributions count as income tax as per normal dividends, or do they count towards CGT (ie able to be offset against capital losses), as they're basically Fund Distributions?

All I really know is what I read on their website (link below)

http://www.streettracks.com.au/

where I noticed that in a section in "What's new" is a reference to a 2007 Tax Guide. Opening it up, it reads as if the STW distribution is exactly the same as if the fund were an unlisted one.

Regards

 

[Nyden]

All I really know is what I read on their website (link below)

http://www.streettracks.com.au/

where I noticed that in a section in "What's new" is a reference to a 2007 Tax Guide. Opening it up, it reads as if the STW distribution is exactly the same as if the fund were an unlisted one.

Regards

Hmmm. Still trying to determine as to whether or not this applies;
http://www.ato.gov.au/individuals/content.asp?doc=/content/00096850.htm&page=44&H44