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Geared Managed Funds?

Discussion in 'Managed Funds & Index Funds' started by archangelsupreme, 13th Sep, 2007.

  1. archangelsupreme

    archangelsupreme Well-Known Member

    Joined:
    7th Sep, 2007
    Posts:
    206
    Location:
    Australia
    What do people think of Geared Managed funds....they are among the top performing funds....

    ...however there MERs is also among the top of any managed fund.

    Is there any advantage in investing in these funds? Anyone u recommend?

    ? Perpetual WFI Perpetual's Geared Australian
    ? Skandia GIS - Blended Australian Geared Shares Fd
    ? CFS FC Inv - CFS Geared Share
    ? CFS MIF - Geared Share Fund

    Thanks.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Geared funds are generally more volatile than other funds - so if you are borrowing to invest, or if you can't stand to see your investment drop by 36% when the market only drops 9% (as in the case of the CFS W/S Geared Share fund in the recent correction) ... then you need to be cautious about how you approach these funds.

    However, if you can live with the volatility, these funds will generally give you better overall results over a longer period of time. Even with a -20% year, the +40% years (or better) will easily see you out in front over a 5+ year period.

    Just don't forget that this strong market can't last forever - the recent extreme returns from geared share funds may not continue as market volatility increases.
     
  3. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi AAS,

    Funds are more expensive generally because they are more active, eg, look at the MER of a Cash Fund vs an International Share fund.

    If your looking at geared funds, they are expensive. In theory, you wil get better returns, with bigger roller coaster rides up and down!.

    Enjoy the ride!

    Cheers,

    Dan

    The above is not a recommendation to invest in managed funds. Speak to a FPA registered financial planner, accountant or tax adviser before making an investment decision.