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Diversifying my Managed Funds

Discussion in 'Managed Funds & Index Funds' started by MichaelWhyte, 23rd Nov, 2007.

  1. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Hi Guys,

    Decided to actually put my money where my mouth is and diversify my managed fund holdings. I've been suggesting for some time that this is the appropriate course of action for me and I've been waiting for a slight pull back in the ASX200 before I executed this switch. Given that has happened recently, I'm going to now sell down 100% of my Navra Blue Chip Australian Share Retail fund and reinvest it as follows:

    35% JBW0008AU Goldman Sachs JBWere Resources Fund
    35% ETL0089AU Lincoln Retail Australian Share Fund
    15% PLA0004AU Platinum Asia Fund
    15% HBC0027AU Challenger China Share Fund

    I've received all of the PDS's from InvestSmart and from Lincoln direct for theirs, and just finished filling out all four application forms. I've written my cover note and called ANZ Margin Services to get their postal address. Tonight I'll confirm my Company as Trustee's ABN and TFN then fill that section in on all four application forms and send the whole big bundle off on Monday.

    I believe the ASX is now representing fair value again after the resurgence of concerns over the sub-prime issue in the US. BHP back at $40 is always a good sign. It will probably take a few days or weeks to get processed and enacted, so acting now should ensure the market doesn't do something stupid like rebound strongly before I get diversified.

    Here's the most recent article from Dr Shane Oliver of AMP which concisely paints the forward view on China and Resources that I subscribe to. There's been lots of other articles from different authors with similar views. This is basically a 25 year expansion with India to follow that's only 5 years old. Sure there's likely to be hiccups along the way, but its time to get on the big boat and not rely on that rising tide lifting all ships.

    http://www.amp.com.au/display/file/...e=China+-+growth+and+shares+-+OI+#39+2007.pdf

    Cheers,
    Michael.
     
  2. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Michael, thanks for sharing your strategy openly ...

    I am interested in learning more about the HBC0027AU Challenger China Share Fund.

    Do you know where I could find history on their quarterly distributions ? I have looked around but cannot seem to find this info on the Challenger website. Any pointers ?
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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  4. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Thanks Sim. Had a look there however no info on dividend payment history. :confused:
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Challenger don't seem publish exact distribution information on their website (that I can find), so I've calculated an estimated distribution by using the pre- and post-distribution unit prices.

    You can see this calculated information in the charts: (hover over the yellow circles to see distribution information)

    [chart=CF;HBC0027AU;from2;mav;20071123]Challenger China Share Fund[/chart]

    ... and you can see an estimate of the income component of the annual performance in the historical performance tables: Yearly Performance: Challenger China Share Fund (HBC0027AU)
     
  6. crc_error

    crc_error The Rule of 72

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    Michael, since your a greens voter, how come your not investing into any ethical or 'green' managed funds? like the global sustainability fund?

    Since your passionate about such things, wouldn't it be right that you back environmental friendly investing? global resources is all about digging up oil, coal etc which is polluting, and your investing in china, which is well known for their pollution, and lack of consideration for the environment.

    I have personally invested in hunter hall global ethical trust. and put a decent sum into it.

    Tom.
     
  7. JIT

    JIT Well-Known Member

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    Location:
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    MW,

    Did you have any final thoughts on the Navra fund, now that you are selling out?

    Has it lived up to your expectations?

    Thanks.
     
  8. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Hi JIT,

    The main point I'd make about the Navra fund is that it certainly has lived up to its promise and exceeded my initial expectations. My situation has changed somewhat such that I don't need as big an income stream from my managed funds now that I've paid off my PPOR so I am looking to more tax effective funds now.

    I think the net return that Navra has delivered me over the past couple of years after my interest costs is still well over $100K. So, the opportunity cost of choosing not to have invested would have been huge. When I first invested in Navra I knew little of the fund, but knew I liked the prospects for the ASX so chose to invest immediately using Navra. In hindsight, I am thrilled I made that decision and thrilled with the outcome Navra delivered me.

    Having said that, I am looking forward to the prospects now of potentially higher absolute returns from my diversified portfolio and I recognise that I am taking on a degree more risk to achieve this given the nature of my investment choices. But I believe I am more informed now than when I initially invested in Navra and that this change is just a slight evolution in my investing strategy. I still maintain that my new portfolio can serve as just an effective income stream if I require it to act as such. Absolute returns, regardless of whether they are trading profits or unrealised capital gains is what I am after. The higher the absolute return, the more equity created that is then available as cash readily should I need it to augment my salaried income to fund the holding costs of my IPs.

    Strategy intact, execution slightly enhanced is how I see it. But time will tell in the end whether this is in fact the case. As always I will remain completely open about my decisions and my personal opinions on my investment vehicles, but I caution everyone again that these are just my personal opinions. I am by no means a financial advisor and these comments should be treated as just one investor's personal opinions only.

    Cheers,
    Michael
     
  9. JIT

    JIT Well-Known Member

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    Thanks for the reply.

    Sounds sensible.
     
  10. JustB

    JustB Well-Known Member

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    Hi Michael,

    Thanks for sharing your strategy, I'm always interested to read your views and opinions on fund performance and the markets in general. Since you mentioned in your caveat that your choice of funds is based on your own research and opinions, I was just wondering if you've had any input or advise on your diversification plans from NFS? Are you still enlisting their services? Or has your personal position outgrown the point where they can continue to add value to your overall strategy?

    Cheers,

    JustB
     
  11. MJK

    MJK Well-Known Member

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    Michael,

    You must be bullish about global markets if you are moving into a 100% growth based position.

    I wonder if it is more likely NI will achieve income with no capital loss than growth funds will achieve growth. Perhaps market will go sideways for a while.

    Also if we have a decent drop it could take a year just to get back to where you where when you started.

    Even if NI value drops in the above event it should pay income while waiting for market to get back up.

    You are right that you are increasing your risk profile.

    Personally for me its Realestate for growth and MF's for income.

    MJK:D:D
     
  12. MichaelWhyte

    MichaelWhyte Well-Known Member

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    Location:
    Sydney, NSW
    Hi MJK,

    Moving to a growth portfolio away from an income portfolio in no way increases my risk profile. I'm stating that my risk profile is increased due to the nature of the funds I am selecting. Instead of investing via Navra in ASX200 blue chip companies weighted to the ASX50, I will be investing in Asian stocks, the commodities sector and a little bit of the ASX via Lincoln. So the mix of my stocks has changed and to a more riskier mix. But as you know risk equals return, and I am happy to wear a slightly higher risk profile on my shares portfolio.

    I still believe that absolute returns is the only true measure of performance, and it is absolute returns that I am trying to achieve now.

    JustB, I did talk to NFS some months back about my diversification strategy and they agreed that it was appropriate for my situation now and selected some alternative managed funds to achieve my needs. I haven't gone back to them yet to let them know of the actual managed funds and mix I have settled on for my diversified portfolio. They provide an excellent service and are still an integral part of my team, albeit less critical now than in the earlier stages of my strategy formulation.

    Regards,
    Michael.