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Geared Mananged Funds

Discussion in 'Managed Funds & Index Funds' started by Chris C, 23rd Oct, 2008.

  1. Chris C

    Chris C Well-Known Member

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    I was recently reading another thread in these forums which mentioned geared managed funds. I was just wondering if anyone knew of any geared managed funds that are worth looking into?

    Also I was wondering what are the drawbacks of geared managed funds outside of increased volatility?

    Also do most margin lender allow you to gear into geared funds?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Yes, you can generally gear into geared funds just as highly as non-geared funds !!

    Proceed with caution !!!

    As far as choosing a good one, I think you mainly want to ensure that the underlying investments are pretty sound - stick to blue-chip stocks.

    I've really only ever looked at CFS Geared Australian share fund (one of the best long term performers in our market), and 452 Geared Australian share fund is almost as good (CFS resell this one too I think).

    I also entertained the idea of investing in the CFS Colliers Geared Global Property fund ... good thing I didn't ... has been a bit of a train wreck with unit price down around 13c now :eek:

    Geared funds also have higher costs associated with them due to the expense of sourcing and managing finance - so fees are typically higher overall too.
     
  3. carlosreynolds

    carlosreynolds Active Member

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    I heard from a good source that Vanguard is currently investigating a geared version of the Vanguard Aus'n Shares Index Fund.

    No concrete details as yet, but indicatively a gearing level of 40% to 50%.

    Discuss.
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I think an internally geared index fund has merit - an index fund should at least show only "average" volatility (if for a broad index rather than a narrow sector index).

    Also makes it easy for super funds to access geared returns.

    Will be interesting to see how cheaply they can do it.
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Hi Chris,

    Also Ausbil Dexia and Advance have geared Australian share funds.

    Cheers,

    Dan

    PS Before making an investment decision speak to your FPA registered Financial Planner.