Managed Funds - General Query

[bluelabel]

Hi All,

I was sniffing around E-trade yesterday and found a part on investing in managed funds.

I don't know much about these and am currently doing my own research, but i also wanted to find out if anyone on ASF has any experience in investing in managed funds (more particulalry via sites like E-trade, commsec, et al)

Researching some yesterday on E-trade there were some returning 20%+ and thought that sounds too good to be true, and most probably is.

Just wondering your experiences, what to look for in a good one, what to look for in a bad one, and probably more to the point how they operate.

:bier:

blue

 

[rbourne1]

Hi All,

I was sniffing around E-trade yesterday and found a part on investing in managed funds.

I don't know much about these and am currently doing my own research, but i also wanted to find out if anyone on ASF has any experience in investing in managed funds (more particulalry via sites like E-trade, commsec, et al)

Researching some yesterday on E-trade there were some returning 20%+ and thought that sounds too good to be true, and most probably is.

Just wondering your experiences, what to look for in a good one, what to look for in a bad one, and probably more to the point how they operate.

:bier:

blue

Managed funds are a useful way to gain exposure to stocks if you want someone to manage your investment. Naturally, it comes at a cost compared to doing it yourself.
If you are buying managed funds through comsec or etrade then make sure you don't pay any upfront commissions and check out what the ongoing fee is. You also need to look at the spread of the buy/sell unit prices. This is where many fund managers hide some of their fees.
There are certainly funds earning 20% or more out there but there is more to picking funds than just chasing returns.

As far as how to find the best managed funds I wrote a couple of articles on the subject which you might find useful. You can access them through my signature link.

Another benefit of using managed funds is that you can gain exposure to overseas markets through an Australian domiciled trust. You can also target geographic sectors and specific sectors such as resources, industrial stocks or even property.

If you are investing in international funds you also need to consider the effect exchange rates may have on performance.

 

[condog]

I personally dislike most managed funds....however they serve a very good role for those that are too busy or lazy to educate themselves or those whose portfolios are so big they need an assett manager for each segment of thier investment.

As above you will pay about a 1.5% - 3% premium (managment fee and commissions) for the privelege....In times like now this does not matter as much, as any index fund would be returning around 20%+ .... However when returns are substantially lower at around 8% or less , this 3% mgmt fee can drive most investors crazy and see them running for the hills , at the exact point in time when they should be busy buying as many units as possible...

In terms of 20%....At present thats a very realistic return for the current 12 months for an Australian Equity fund....

One area funds are particularly useful is for accessing oversease exposure with active manaagment and some times currency hedging ..

In fact right now because most analysts are saying the Aussie dollar is significantly over valued , and many OS assets are in the douldrems, it would seem like a great time to be able to gobble up lots of OS units in a managed funds in the industries or countries of your choice...If thats your style?