Name the best managed fund

[fivemillion]

OK Everybody,

Especially those in managed funds! I want to invest in a managed fund because I don't have the time to do my own research.

Which is the one to go for and why.

Sorry if this question has been asked before but it is probably worth reviewing anyway.

 

[Jesse Livermore]

I want to invest in a managed fund because I don't have the time to do my own research. Which is the one to go for and why.

I don't think there is such thing as the 'best ' fund. All funds are different and cater for different needs and objectives, personal and financial situations, and risk profiles

In general stick managers owned by the major retail banks. Companies like ING, Colonial First State, MLC, BT Financial, and Advance come to mind.

Also if you're intending on investing into a fund you need to check out http://www.morningstar.com.au/. Morningstar are the leading supplier of managed invesment research in the world.

Jesse Livermore

 

[Jesse Livermore]

I read this morning that head of property securities at Colonial First State resigned and took his team with him to create a property fund at Perrenial, and CFS have yet to find a new team to manage the $6 billion fund.

Jesse Livermore

 

[bvbfan]

Past performance is no guide of future performance!
The best performers rarely turn out to be the best performer the next period and the worst performers don't always stay there

Having said that I have issues with ING and BT

Yup heard that about Colonial today at work, happens more often than you would think.

 

[nizar]

also see tradingroom.com.au, and click on managed funds link...

I personally own units in CFS geared aust. share fund. The head of the team managing that fund left and was replaced around august, and i didnt even notice...and returns and performance r still the same...

As somebody above mentioned, the "best fund" for me may not be the best one for you, it depends on your risk appetite and time-frame...

 

[Smurf1976]

Past performance is no guide of future performance!
The best performers rarely turn out to be the best performer the next period and the worst performers don't always stay there

Having said that I have issues with ING and BT

Yup heard that about Colonial today at work, happens more often than you would think.

In 1999 I invested heavily with a top performing Australian and international share fund. Supposedly it was nicely balanced across a range of industries and countries.

Shortly afterwards I found out the hard way that the actual investments were heavily skewed towards dot.com stocks listed on the Nasdaq. Needless to say what happened to my investment (and yes it was leveraged so a BIG loss).

Moral of the story - if you're going to invest in managed funds then spread the money between several different managers (not just different funds with the same company) and make sure that the actual investments are what you think they are. For example, if you're investing in a "resources" fund then make sure it isn't all in oil companies or all in gold etc but rather spread across a wide range of resources and companies. (Unless you specifically want only oil stocks etc).

Always take some PERSONAL RESPONSIBILTY for your investments. At least make sure that the fund is what you think it is before you invest. If it's performing noticeably better than others then find out WHY. They could simply be taking very high risks and it could have been pure luck which is unlikely to be repeated.

 

[Jesse Livermore]

If you're going to invest in managed funds then spread the money between several different managers (not just different funds with the same company) and make sure that the actual investments are what you think they are.

The majority of the major funds offer multi-manager options, that is if you are investing into a diversified fund (not just a single asset class). The fund you put your money with will then invest into other funds (as well as their own) that focus on single asset classes like PIMCO (Fixed Interest), Schroders, Alpha etc. (Shares), Pengana, Colliers etc. (Property).

Being part of a fund allows you also have access to wholesale funds (ABN, UBS etc.) that might otherwise be unavailable to a retail investor

Jesse Livermore

 

[chansw]

I agree what other said. It all comes down to what you like to invest (shares - social responsible or not?, fixed income, property etc), the amount of money you like to start with (Some funds start with $25000 and some allow you to start with $1000 using saving plan), the degree of risk that you are willing to take, your investment timeframe ... etc.

That is your money and I think you should do some research using Morning Star. Then, you can download some PDSs (Product Disclosure Statement) from Direct Access. Take some time to read the PDS. Also, the web sites of those fund managers provide the updated information of the fund than the PDS itself.

I personally use Direct Access (using a Financial Adviser or not depends on your personal circumstance) and invest in Colonial First State's Global Resources Fund. I am very happy with the performance so far. Again, I am not trying to suggest this is the one you should invest. Do your own research.

 

[grumpee boi]

In response to what was said above sometimes it is not preferable to invest across many different managers as there can often be an overlap of the stocks that you are invested in. Therefore you may have greater exposure to an individual company or asset class than was intended.

In response to the difficult question of who is the best managed fund, it would be hard to go past Dimensional Fund Advisers. The reason being that they are probably the cheapest (in terms of management expense ratios) and basically invest in the entire universe of stocks. That is, they are index funds and reduce the firm-specific risk of investing in only a handful of stocks (as do most managed funds).

They really stand out because of their low costs (compare an investment of $100,000 over 20 years with a DFA management expense ratio of say 0.4% versus a normal Aus. share fund of around 2% being taken out and you will be pleasantly surprised). They are also more tax efficient because the stocks that they do buy do not move in and out of the index that the fund tracks that often. So there is not a lot of buying and selling of stocks with the associated CGT drag on performance.

Having said all of this, unless you have $1 mill to invest directly then you have to go through a financial planner. This is because DFA educate their planners with respect to their investment philosophy and the planners in turn are expected to prevent their clients from churning their accounts, thereby creating tax inefficiencies for everyone else.

So another answer would be Vanguard - another index fund provider. Problem is, you have to go through an adviser unless you have half a mill to invest directly! Problems, problems.

A final solution is to invest in an Exchange Traded Fund (ETF) that is basically an index fund that can be bought and sold on the ASX. STW is the ETF that represents the largest 200 shares on the ASX by market capitalisation and has returned something like 20% annualised over the last few years (please do not quote me). Best thing is you are only charged 0.286% for memory as a management expense ratio (plus buy/sell brokerage) so the costs are really reduced. There is also a listed property ETF on the ASX too but there are currently no fixed interest ETFs although I am sure you could supplement these with something else.

Adam