Timing of investing into a managed fund

[Judd]

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

I can only suggest that you download and read the Product Disclosure Statement and go to Part 10, which starts on page 38. It refers to taxation of distributions. Other than that perhaps a taxation specialist is the way to go. Not my sphere of expertise (as I have none )

 

[krisbarry]

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.

Distributions count as Capital Gains

 

[Nyden]

Distributions count as Capital Gains

You are sure of this STC?

If so, thank you very much.

 

[IFocus]

Timing can add to your return but doing nothing no return

Speaking in general terms buying into a successful fund in draw down is the best method as a rule for higher returns. There should be plenty of reading on the net about some of the longer term top hedge funds (that take positions in stocks and futures not leavaged products)in the US and the numbers continue to show when returns start to draw down people pull there money out where as thats the time to put money in, generally a bit at a time in case the fund blows up this is for the US.

Similarly the same applies here look thought the funds that have a consistent higher return in relation the the XJO over 5 years or more.

One consideration rather than STW is do some research on the stock AFI if I remember correctly they look to sort of mirror but out preform the index and have done so for some of years but please check that its been awhile since I looked at them.

If you are a true long term investor (think 10 to 20 years)this ongoing correction / bear market is the time to do this buying some on the way down some at the bottom some on the way up over maybe the next year or so is a strategy I have seen used by others to generate very good returns

Good luck, research, research and need I say research is the key most people send more time planning there holidays than they do buying stocks

Hope this helps

Focus

 

[Judd]

You are sure of this STC?

If so, thank you very much.

A broad statement by STC which is not entirely true. A distribution from an unlisted managed fund or, apparently from STW, may consist of:

Franked amounts;
Franking Credits;
Unfranked amounts;
Discounted capital gains;
Non-concessional capital gains
Interest:
Tax deferred amounts.

These are listed on the end of year statements that managed funds send to holders of unit trusts. I know because that is the sort of stuff we received when we held unlisted managed funds.

AFI as in the post above is a Listed Investment Company which provides dividends - as opposed to distributions - and LIC discounted capital gains. These dividends are included in your tax return in the year when they are received unlike managed fund distributions which are included in the in your previous tax years return.

There are a number of these LICs, such as ARG, CHO, MLT, MIR, SYL, DUI, AUI, WHF, CIN which have been around for many a year. These "older" ones are internally managed and most have an equivalent MER of way below 0.5%. The newer ones, WAM, WIL and so on, are externally managed and have an MER of about 1% and some even have a performance fee.

(Disclaimer: We hold AFI and a number of the others and have for quite a while)

I've done this for someone else, but I'll do it again. The links to annual reports for some of these older LICs

ARG

http://www.argoinvestments.com.au/results.php?id=422

AFI

http://www.afi.com.au/annual_report.asp

CHO

http://www.choiseul.com.au/?reports1

MLT

http://www.milton.com.au/?reports1

It may be worthwhile reading them (and their websites) to see what they are on about.

Regards and now off to sell groceries to the masses. I wont say how much per hour I get for doing that as it is embarrassing.

 

[Nyden]

In truth, I don't know why funds like this aren't more popular? Especially with armatures.

No need to be sifting through announcements, no need to have any understandings of individual companies, or fundamentals of demand.

Hmmm, surely all these funds don't track the ASX 200 though? Many would be managed. Shall have to look into them!

 

[Julia]

Regards and now off to sell groceries to the masses. I wont say how much per hour I get for doing that as it is embarrassing.

Don't be embarrassed, Judd. You're working doing something necessary for our society to function. Much better than sucking from the public purse.
Goodonya.

 

[Judd]

Don't be embarrassed, Judd. You're working doing something necessary for our society to function. Much better than sucking from the public purse.
Goodonya.

Ah, but Julia I did suck from the public purse. I was a public servant for 30 years before I took a redundancy (well, in technical sense my 5 year contract was determined) in April 2007. All for the better I think.

In truth, I don't know why funds like this aren't more popular? Especially with armatures.

I think the are. It seems if you go along to the annual general meetings or the information sessions about 400 to 700 people turn up. However, if I went - at age 49 - it would bring the average age of the attendees down by some years. Lot of older people there who have seen a number of fluctuations in the sharemarket and know the value of dividends. Tell you honestly, I know one lady who is just on 80 years of age. Her income from dividends (and this will scare the bejesus out of younger players in the market) is $1M per year. And no, I am not after her so get your dirty minds out of the gutter. I just hope she lives to 120 and spends all her money.

 

[Nyden]

Ah, but Julia I did suck from the public purse. I was a public servant for 30 years before I took a redundancy (well, in technical sense my 5 year contract was determined) in April 2007. All for the better I think.



I think the are. It seems if you go along to the annual general meetings or the information sessions about 400 to 700 people turn up. However, if I went - at age 49 - it would bring the average age of the attendees down by some years. Lot of older people there who have seen a number of fluctuations in the sharemarket and know the value of dividends. Tell you honestly, I know one lady who is just on 80 years of age. Her income from dividends (and this will scare the bejesus out of younger players in the market) is $1M per year. And no, I am not after her so get your dirty minds out of the gutter. I just hope she lives to 120 and spends all her money.

Judd, question on AFI. Do they simply deduct fees automatically from the dividends, the same as STW?

AFI is a managed fund, isn't it? I must say, I am quite impressed with the low fees there. Doesn't seem to follow the ASX200, but rather 20-30 stocks?

& Finally; AFI pay dividends, don't they? As in, not distributions?

& Mate, selling groceries sounds like a lovely stress free job (correct me though here! ), I'd love to be doing something like that.

 

[Judd]

Judd, question on AFI. Do they simply deduct fees automatically from the dividends, the same as STW?

AFI is a managed fund, isn't it? I must say, I am quite impressed with the low fees there. Doesn't seem to follow the ASX200, but rather 20-30 stocks?

& Finally; AFI pay dividends, don't they? As in, not distributions?

& Mate, selling groceries sounds like a lovely stress free job (correct me though here! ), I'd love to be doing something like that.

OK, first I am not an expert, a tax specialist or any other form of person who can provide financial advice. Let me make that very clear and I would also say that, after blowing up a margin account last year and costing my family heaps, I am the last person on the face of this earth you would ask "And what do you think about the share market?"

AFI and others like it are managed funds in my view. But not as usually a managed fund is perceived. They are actually established companies listed on the ASX in just the same way as BHP. They are required to abide by ASX listing rules and various legislation which are applicable to companies.

The difference is they they invest in other companies which are also listed on the ASX.

Directors are paid fees, they pay brokerage and all that sort of crap. This is expensed in the profit and loss account. That pay corporate tax. All the same as, say IAG, RIO, CAB, you name it.

They rarely sell. In fact it is estimated that AFI has some $1billion in unrealised capital gains on its books. They just buy and sit. And sit. And sit.

When they sell, it is sometimes a bit more than "adjusting" the books. In 2007 AFI had Centro as part of its portfolio valued at $27M. Had it for over 5 or more years. Had not added any shares in that time. By December 2007 it had got rid of the lot for $18.7M. Seems obvious to me they knew what may be bad was going rotten and they dumpt the lot as fast as they could. And before it went off a cliff. Same with TPI and Alinta (means to me they did noyt like the B&B takeover)

Sorry for the long-winded stuff.

As for dividends, yes they pay those the same as any other company (not EFTs) listed on the ASX.

Finally, selling groceries is not too bad. I just do it and go home. The real bitch is trying to console very young girls who have received a foul diatribe from people who should know better. I help women unload and pack groceries when they are pushing a pram around while carrying a young one. It is the decent thing to do.


BUT BUT, elderly foul mouthed cretins who abuse the young lasses and lads who work with me.............I just wish to kick their walking frames out from underneath them. They are trash.

 

[Nyden]

OK, first I am not an expert, a tax specialist or any other form of person who can provide financial advice. Let me make that very clear and I would also say that, after blowing up a margin account last year and costing my family heaps, I am the last person on the face of this earth you would ask "And what do you think about the share market?"

AFI and others like it are managed funds in my view. But not as usually a managed fund is perceived. They are actually established companies listed on the ASX in just the same way as BHP. They are required to abide by ASX listing rules and various legislation which are applicable to companies.

The difference is they they invest in other companies which are also listed on the ASX.

Directors are paid fees, they pay brokerage and all that sort of crap. This is expensed in the profit and loss account. That pay corporate tax. All the same as, say IAG, RIO, CAB, you name it.

They rarely sell. In fact it is estimated that AFI has some $1billion in unrealised capital gains on its books. They just buy and sit. And sit. And sit.

When they sell, it is sometimes a bit more than "adjusting" the books. In 2007 AFI had Centro as part of its portfolio valued at $27M. Had it for over 5 or more years. Had not added any shares in that time. By December 2007 it had got rid of the lot for $18.7M. Seems obvious to me they knew what may be bad was going rotten and they dumpt the lot as fast as they could. And before it went off a cliff. Same with TPI and Alinta (means to me they did noyt like the B&B takeover)

Sorry for the long-winded stuff.

As for dividends, yes they pay those the same as any other company (not EFTs) listed on the ASX.

Finally, selling groceries is not too bad. I just do it and go home. The real bitch is trying to console very young girls who have received a foul diatribe from people who should know better. I help women unload and pack groceries when they are pushing a pram around while carrying a young one. It is the decent thing to do.


BUT BUT, elderly foul mouthed cretins who abuse the young lasses and lads who work with me.............I just wish to kick their walking frames out from underneath them. They are trash.

Heh, don't worry mate - wasn't asking for advice in any form Just looking for facts that I can't seem to find in the FAQ!

So, am I to take it that yes - fees are automatically taken out of dividends? Not that you ever need to send them a cheque? :


Wow, I'm so sorry to hear that Judd about your unfortunate experience with margin lending. Surely this was with individual stocks though? Funds generally don't experience such fluctuations?

It certainly sounds like you're at least an honorable grocer! Helping to make a mother's day a little easier is in it's own a fulfilling career


Once again, thank you for all the current information.

 

[Judd]

So, am I to take it that yes - fees are automatically taken out of dividends? Not that you ever need to send them a cheque? :

Cool. Fees are expensed in the P&L statement (or whatever it is called today) before dividends are declared. Dividends are after ALL expenses including directors fees, blah, blah have been take out.

And I am very kind to small animals and dumb children.