Join our investing community

Big fund names disappoint

Discussion in 'Managed Funds & Index Funds' started by dkmc, 31st Aug, 2007.

  1. dkmc

    dkmc Well-Known Member

    Joined:
    24th Aug, 2005
    Posts:
    165
  2. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    This approach they take in regards to high levels of distributions being bad does not tell the whole story and does not consider that managed funds might be part of a structured portfolio of investments as opposed to a stand-alone investment.

    ... and that last paragraph is very presumptive - high levels of trading might actually be adding value ... I think it is wrong to automatically write off all funds which "trade" as ineffective.
     
  4. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    I guess in a way income funds have replaced the annuity providers of old (I don't mean pensions).

    They can fulfil a need for a regular income stream.

    The main difference is that an income oriented managed fund would give better returns because the investor bears some risk to allow the provider to make higher yield market based investments. Don't forget these must be realised on a regular basis to actually return the income to the investors (doh!).

    An annuity provider who is locked into a contracted rate and had to return any capital at the end would make conservative investments at about the cash rate.

    Comparing to accumulation funds does not serve any useful purpose as they are effectively different asset classes, except maybe to generate controversy to sell a story.

    You need to invest asset different asset classes according to your financial objectives - assuming you have one.

    Cheers,

    Rob
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    We also need to be careful to differentiate between what we call "income funds" - investing in mortgages or commercial property and other traditional income based investments, versus the newer type of fund (eg Navra) which aims to generate income by actively trading some aspect of the market.

    These are again very different beasts with very different risk profiles.
     
  6. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Perhaps you should write to Alan and Scott point out the false assumptions in his article?

    N
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    I don't think it would be worth the effort - he's preaching to the mums and dads - they aren't necessarily looking at structured portfolios and just want something simple.