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Direct Purchase v Managed Funds?

Discussion in 'Shares' started by Strawbs, 27th Aug, 2012.

  1. Strawbs

    Strawbs Member

    Joined:
    27th Aug, 2012
    Posts:
    10
    Location:
    Melbourne
    Assuming I have a long-term focus (which I do).... Why would I buy blue chip shares directly when I have to pay for each buy transaction when I could put my money into a managed fund which has (all but) the same shares in its portfolio that I am looking for? One answer which comes to mind is I can control my portfolio whereas the managed fund might make buy/sell decisions I don’t agree with but is there anything else I am missing?
     
  2. jabba_jones

    jabba_jones Well-Known Member

    Joined:
    2nd Dec, 2007
    Posts:
    60
    Location:
    Sydney
    Investing into a fund means:

    Ongoing management fees
    You generally pay a Buy/Sell spread covering the brokerage costs of the fund
    Realised capital gains from Fund trading giving you a tax liability you wouldn't have if you held directly.
    Forfeited Franking credits due to funds trading around ex dates

    Lastly, not so much on Blue Chips, but there is liquidity risk, funds can freeze redemptions.