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So right Allan. I am hoping to claw back tax paid so far on ghost distributions. Let's keep up this channel of real help.
Regards,
Managed fund co-operation group
- Thread starter mellifuous
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So right Allan. I am hoping to claw back tax paid so far on ghost distributions. Let's keep up this channel of real help.
Regards,
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I have an idea ---
The following overcomes one of the drawbacks for investors, the lack of cohesion amongst investors in their respective managed funds (listed and unlisted).
The fact that the manager is organised and focused always puts the manager at a distinct advantage over individual investors.
In order to bring some degree of balance between respective powers, I suggest the following:-
When a managed fund is created, a necessary step in the process is to establish a website (be it the manager's website or elsewhere) with a forum, or alternatively with Yahoo Forums.
The website forum should be moderated by democratically elected members of the fund.
Leadership should be democratically elected from within the forum, with guidelines published for
elections, time frames, etc. It should not be ad hoc.
As each member invests in the fund (scheme), the manager should be compelled to provide that member with a username and password for access to the forum.
There should also be some mechanism for the forum to handle postal communincations to and from members who do not have access to a computer.
I believe that no one should be banned (but postings should necessarily be moderated), and it should be illegal for anyone to join the forum who is not a member of that managed fund.
Any comments?
The following overcomes one of the drawbacks for investors, the lack of cohesion amongst investors in their respective managed funds (listed and unlisted).
The fact that the manager is organised and focused always puts the manager at a distinct advantage over individual investors.
In order to bring some degree of balance between respective powers, I suggest the following:-
When a managed fund is created, a necessary step in the process is to establish a website (be it the manager's website or elsewhere) with a forum, or alternatively with Yahoo Forums.
The website forum should be moderated by democratically elected members of the fund.
Leadership should be democratically elected from within the forum, with guidelines published for
elections, time frames, etc. It should not be ad hoc.
As each member invests in the fund (scheme), the manager should be compelled to provide that member with a username and password for access to the forum.
There should also be some mechanism for the forum to handle postal communincations to and from members who do not have access to a computer.
I believe that no one should be banned (but postings should necessarily be moderated), and it should be illegal for anyone to join the forum who is not a member of that managed fund.
Any comments?
Rather than being illegal for "anyone to join the forum" I'd suggest "anyone to post to the forum" in this way potential investors can be warned of [potential] conflicts within the fund.
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Yes, you're right.
I'm making a suggestion to ASIC about his point.
I think that investors in managed funds are not as savvy as investors in the stock market and therefore need a place of reference for information and peer support.
This article exposes the dilemma that is now eating into the life savings of many investors in property trusts...
http://www.smh.com.au/business/real...y-train-of-management-fees-20100126-mwc8.html
Real estate investment trusts a gravy train of management fees January 27, 2010
Two recent inquiries have ignored problems with the structure, writes David Nunnerley.
The failures and disappointments of listed property or real estate investment trusts over the past two years have revealed shortcomings in their management fee structures.
The investment trusts represent a big investment sector but were clearly not on the radar of the Joint Parliamentary Inquiry into Financial Products and Services, chaired by Bernie Ripoll, or the Productivity Commission inquiry into executive remuneration.
The trusts are very different from corporations. The management fees in effect replace directors' fees,
which create real or perceived conflicts of interest between managers and investors.
Almost without exception, real estate investment trusts are marketed on the basis that management will use its skill in selecting properties for future acquisitions, lowering investment risk and providing growth. The motivation of the promoters and managers of the trust is presumably to build recurring management fees, as well as the capital value of the management business, which is determined by the value of funds under management.
This strategy creates an inherent conflict of interest. Adding to the size of the property investment portfolio may result in a dilution or slowing of the income generation of the property portfolio of the particular trust .
Besides any inherent conflict, some of the trust management fees are simply excessive. The detailed fee structures of the trusts vary, but operational and management costs are similar.
Operational costs covers the management of the individual properties - letting agents' fees, supervision of property maintenance, agents' payments of direct property expenses, property insurance, preparation of monthly income and expense statements, etc. These expenses are usually charged directly against the property income of the properties concerned to arrive at net property income. Management costs essentially comprise the cost of the administration of the real estate investment trust and typically include accounting, audit fees, preparation of management and unit holder reports, office costs, cost of compliance, legal fees, etc.
On top of these costs, a management fee is payable to the manager, usually expressed as a percentage calculated on the gross asset value of the trusts. These fees are recurring and represent fees for directing the trust involving strategy, review of budgets, instructing property managing agents, approving unit holder reports, etc. The costs incurred by the manager for providing these services would be only a small fraction of the fee.
It is this management fee, based on a percentage of the gross value of the trust assets, that provides a secure recurring cash flow for the manager. In some cases management fees are increased by incentive-related fees linked to index performance.
Some trusts also charge fees of up to 2.5 per cent on the value of any properties acquired, on the value of property sold and on the amount of loans raised. These fees can be severe, are usually capitalised to the value of the property assets acquired and typically not presented as costs in income statements.
Corporations law provides for replacement of trust managers. However, there are a number of trusts where the manager has been able to entrench its position with management contracts for up to 20 years. It is difficult to understand how such contracts can be considered to be in the investors' interest. Real estate trust management contracts are valuable assets, essentially developed at the expense of the investor.
At what level fees become excessive is a matter of subjective judgment. Payment of fair fees is expected to allow for the administration of the properties and the trust, but management fees that could be regarded as directors' fees are questionable and are conducive to exploitation.
Management fees are payable whether the trust makes a profit or a loss. A far more equitable arrangement would be for management contracts to be subject to periodic approval by unit holder resolution, rather like company director appointments. After all, the manager is a contractor, and many others would be willing to take on the job.
For this to happen, annual general meetings - no longer a requirement for the trusts - would need to be compulsory so unit holders would have a forum to question the performance of the manager. The Joint Parliamentary Inquiry into Financial Products and Services recommended that Australian corporations legislation be amended to state that financial planners hold a fiduciary duty to put the interests of their clients first.
For real estate investment trusts, the corporations legislation already includes similar provisions dealing with conflicts of interest between officers of the responsible entity on the one side and investor interests on the other.
Nonetheless, one cannot help questioning the effectiveness of
the legislation and the trusts' governance procedures.
David Nunnerley is an accountant.
http://www.smh.com.au/business/real...y-train-of-management-fees-20100126-mwc8.html
Real estate investment trusts a gravy train of management fees January 27, 2010
Two recent inquiries have ignored problems with the structure, writes David Nunnerley.
The failures and disappointments of listed property or real estate investment trusts over the past two years have revealed shortcomings in their management fee structures.
The investment trusts represent a big investment sector but were clearly not on the radar of the Joint Parliamentary Inquiry into Financial Products and Services, chaired by Bernie Ripoll, or the Productivity Commission inquiry into executive remuneration.
The trusts are very different from corporations. The management fees in effect replace directors' fees,
which create real or perceived conflicts of interest between managers and investors.
Almost without exception, real estate investment trusts are marketed on the basis that management will use its skill in selecting properties for future acquisitions, lowering investment risk and providing growth. The motivation of the promoters and managers of the trust is presumably to build recurring management fees, as well as the capital value of the management business, which is determined by the value of funds under management.
This strategy creates an inherent conflict of interest. Adding to the size of the property investment portfolio may result in a dilution or slowing of the income generation of the property portfolio of the particular trust .
Besides any inherent conflict, some of the trust management fees are simply excessive. The detailed fee structures of the trusts vary, but operational and management costs are similar.
Operational costs covers the management of the individual properties - letting agents' fees, supervision of property maintenance, agents' payments of direct property expenses, property insurance, preparation of monthly income and expense statements, etc. These expenses are usually charged directly against the property income of the properties concerned to arrive at net property income. Management costs essentially comprise the cost of the administration of the real estate investment trust and typically include accounting, audit fees, preparation of management and unit holder reports, office costs, cost of compliance, legal fees, etc.
On top of these costs, a management fee is payable to the manager, usually expressed as a percentage calculated on the gross asset value of the trusts. These fees are recurring and represent fees for directing the trust involving strategy, review of budgets, instructing property managing agents, approving unit holder reports, etc. The costs incurred by the manager for providing these services would be only a small fraction of the fee.
It is this management fee, based on a percentage of the gross value of the trust assets, that provides a secure recurring cash flow for the manager. In some cases management fees are increased by incentive-related fees linked to index performance.
Some trusts also charge fees of up to 2.5 per cent on the value of any properties acquired, on the value of property sold and on the amount of loans raised. These fees can be severe, are usually capitalised to the value of the property assets acquired and typically not presented as costs in income statements.
Corporations law provides for replacement of trust managers. However, there are a number of trusts where the manager has been able to entrench its position with management contracts for up to 20 years. It is difficult to understand how such contracts can be considered to be in the investors' interest. Real estate trust management contracts are valuable assets, essentially developed at the expense of the investor.
At what level fees become excessive is a matter of subjective judgment. Payment of fair fees is expected to allow for the administration of the properties and the trust, but management fees that could be regarded as directors' fees are questionable and are conducive to exploitation.
Management fees are payable whether the trust makes a profit or a loss. A far more equitable arrangement would be for management contracts to be subject to periodic approval by unit holder resolution, rather like company director appointments. After all, the manager is a contractor, and many others would be willing to take on the job.
For this to happen, annual general meetings - no longer a requirement for the trusts - would need to be compulsory so unit holders would have a forum to question the performance of the manager. The Joint Parliamentary Inquiry into Financial Products and Services recommended that Australian corporations legislation be amended to state that financial planners hold a fiduciary duty to put the interests of their clients first.
For real estate investment trusts, the corporations legislation already includes similar provisions dealing with conflicts of interest between officers of the responsible entity on the one side and investor interests on the other.
Nonetheless, one cannot help questioning the effectiveness of
the legislation and the trusts' governance procedures.
David Nunnerley is an accountant.
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