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International Share / Property Funds.

Discussion in 'Managed Funds & Index Funds' started by Compleks, 5th Oct, 2007.

  1. Compleks

    Compleks Well-Known Member

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    It's just me again.

    Here's a quick summary of my situation:
    I have $5000 invested in an Australian Share fund (CFS FC -452 Geared Aus. Share fund). This was my first fund, and I have been invested with it for a few months now.
    I also have just put $5000 into an Australian Property fund (CFS MIF - Property Securities Fund). Been in for less than a week.

    The next step in my investment strategy is to invest equal amounts into an international share fund, and and international property fund. I figure this should give me a solid foundation, and good market exposure / balance.
    From there I plan to make contributions (probably spread evenly through these 4 funds) whenever I have the cash available.

    So, I've been hunting for an international share fund recently. I'm trying to find a fund which is compatible with the Colonial First Net manager.

    I was just after any advice or recommendations, as all the funds I have come across appear to be doing poorly. I have a bank account which returns 8%pa. and alot of the 'better' funds aren't returning much more than that.
    Am I missing something obvious, or are my expectations for an international fund too high?

    Any advice on property funds would be appreciated too.



    Thanks guys,
    take care...
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Other than Australia and Asia, most share markets aren't doing fantastically at the moment (particularly in AUD terms) ... with the very strong AUD, this has a negative impact on the net returns from international investments - particularly those held in USD.

    This is the extra risk you need to take into consideration with international investments - currency movements. Hedging is one way to try and minimse these risks, but it is no guarantee - and indeed there have been some recent examples (eg Platinum International) where the fund manager got their hedging wrong and it led to poor returns.

    That being said, unless you are looking for some higher risk / higher return exposure (eg Asia or Resources) ... I would consider something like Platinum International (which you can invest in via Colonial ... Colonial First State - Platinum International )

    This is not the only international fund out there - but it is one of the more well known funds (you can see the full history of this fund here: Platinum International Fund )

    If you are taking a long term (5+ years) view of your investments, then I wouldn't be so concerned about the short term perfomance of these funds ... eventually the interest-rate differential between us and the rest of the world (particularly the US) will swing back the other way and we'll see the AUD drop again ... but we may well reach parity before that ... so I expect it to get worse in the short term.

    I recently invested some money in the new Platinum Unhedged fund for my SMSF - but that's something I'm taking a 30+ year view with.
     
  3. Compleks

    Compleks Well-Known Member

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    Sim, you're like my investment guardian angel.

    What is it about this fund you like?
    If I were to look at those figures, I really wouldn't be interested (but that's because I don't have the experience or knowledge like many of you guys do).

    It seems as though they have had a few good years, and pretty much flopped the rest of the time. The last few years in particular are looking pretty poor.
    Are you anticipating that they might be turning around?
    Or do you expect that the returns will be good, provided you're in it for the long run?
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I don't expect anything in particular. I like Platinum - I think they have a sound investment methodology ... although they have been caught out with their hedging in recent years ... and the strong AUD has worked against them given their USD exposure.

    I'm not recommending you invest in Platinum International specifically - I'm just putting it out there as a suggestion for something to consider. I'm not particularly confident in any international funds - especially given the volatility of currency markets in recent years ... but over the long term, international shares generally outperform Australian shares ... so if you are taking a strictly long term view, you would want to have at least some exposure to OS markets.

    I also like Platinum International Brands as a long term investment option (I like the strategy of picking well known brand names that people trust), but that's not available via CFS. I also don't currently hold PIB, I decided to go with Platinum Unhedged for my SMSF instead, with PIB as a shortlisted option for when I get another $25K to invest.

    Are you looking for broad international exposure or are you also considering geographic specific investments (eg Asia) or sector specific investments (eg Resources / Property) ?
     
  5. Compleks

    Compleks Well-Known Member

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    At the moment I think I would be better off with broad exposure.
    But I will consider more localised funds in the future (I have heard various Asian funds mentioned here quite a bit. I've also put some thought into global resource funds, but decided to set up my four base funds before entering into anything 'riskier').

    So currently I'm in the market for a broad international share fund, and a broad international property fund.

    This is what I'm thinking about as my property fund:
    Colonial First State Colliers Global Property Securities

    There is also a colliers geared property fund, but it's fairly new on the market and I'm not sure what to think about it yet.

    Cheers.
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I also looked at both the geared and ungeared versions of the Colliers fund for my SMSF ... decided on the ungeared for now - as you mentioned ... the geared version is very new and came in at a bad time for property in general.

    I'd really want to see how the geared fund reacts to market volatility before I invested in it ... although for my SMSF (with its ultra-long view and no external gearing), it wouldn't be too much of an issue.

    I'll watch and see and consider swapping my money to the geared fund sometime in the future.
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I'd like to hear some suggestions from other people about broad-exposure international funds they like.

    So for non-geographic-specific and non-sector-specific funds, my watch list includes:

    • Platinum International
    • Platinum Unhedged
    • Platinum International Brands

    ... any other suggestions out there ?

    (Once I get a few more fund managers on Compare Funds and set up the comparison tools, this will hopefully become an easier task!)
     
  8. bundy1964

    bundy1964 Well-Known Member

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    Challenger Asian Share Fund

    Challenger China Share Fund not so broad I know :eek:

    ING OA IP ING Glbl Emerg Mkts - EF/Sel

    Aberdeen Emerging Opportunities Fund

    Platinum European Fund

    Hard to find anything outside of asia that is worth leaving the local market for. Must be a lot of set and forget investors out there :eek:
     
  9. crc_error

    crc_error The Rule of 72

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    To give you a idea on what you might expect, have a look at this Russell Report.

    It gives you the long term 10 & 20 year returns of specific asset classes. International property actually had the highest return of 15% PA return.. So even though recently its been hit, if you maintain a longer term view, you should be fine investing into something like colliers. Gearing should magnify its gain over the longer term. Again, chopping and changing at a later stage will make you pay capital gains tax.. so I believe select what you like NOW, and don't sell down later. Warren Buffet NEVER sells anything.. he only buys!

    www.asx.com.au unavailable

    As Sim mentioned, all we need is the US to raise interest rates, and our dollar will come back to normal levels, this will be a benefit for international funds.

    But you need to decide of your comfortable with the risk of investing internationally. I see your following my 40/40/10/10 rule... if your prehaps a little hesitant, then adjust the percentage reducing international exposure to say 50/30..

    I'm invested in the Platinum international brands fund (which isn't avaliable in CFS) and in the Hunter Hall Global ethical trust, which invests into global small ethical companies.. its actually done reasonable well. In their PDS they claim that over the last 40 years, small companies have out performed larger companies..

    I'm also in the UBS international property fund.. but I have a longer term view with my investments.. I don't want to be selling down the track, having to pay capital gains tax, to re-allocate into sectors I neglected cause they were out of flavour at the time.

    Some people claim the Australian Listed property sector is over valued, hence over seas opportunities are providing better value at present..

    Tom
     
  10. dinky

    dinky Member

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    I believe in index investing and the modern portfolio theory, so as part of my portfolio I have a small amount invested in the Vanguard International Index Hedged Fund.

    Vanguard have two International Funds that follow the MSCI World ex. Australia. I prefered the Hedged version because it avoids (at least in theory)the currency risk.

    As others have commented, I think Platinum have a solid strategy but they donĀ“t fit into my personal strategy.

    Cheers,

    DINKY.

    P.S. I need to update my signature (SI1OTW)
     
  11. Compleks

    Compleks Well-Known Member

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    Thanks guys. These discussions are always very informative.

    I have to say that Sim's new site has been an awesome resource during this process. I don't know how you guys managed without it, the information seems so critical.

    Anyway, I'm leaning heavily towards putting money into the 'CFS FC Platinum International' fund and the 'CFS FC Colliers Global Property Securities' Fund.

    I'm also seriously considering the Colliers Geared fund (That would be instead of the non-geared option, rather than investing in both funds. Unless investing in the two funds would be a good idea?).
    I really like the look of their first international property fund, and the way it has performed. Is there any reason why they couldn't duplicate these results in a geared fund? Obviously the property market had a rough patch when their fund opened, but it seems to be recovering nicely from what I can tell.

    Anyway, I'm just clearing my head now.
    I find it helps to sometimes write down my thought process. Hope you guys don't mind.

    Take care everyone.
     
  12. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I wouldn't invest in both the geared and ungeared - my understanding is that they invest in the same assets (I could be wrong there), so no point doubling up.
     
  13. tasmo

    tasmo Well-Known Member

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    Compleks,
    my thoughts are that I would not be investing in either Platinum International or Colliers Global Property funds especially the geared Colliers fund.
    The Colliers geared fund is currently showing -21% return since inception in April, so I would wait a bit till the fund started to turn positive. As the geared fund simply amplifies the ungeared fund performance avoid the un-geared fund too. My negativity on those funds, is they may be suffering collateral damage from the ongoing sub-prime mortgage uncertainties on the global markets.

    Although Platinum International Fund has an excellent long term record, for the last year its performance has been poor, so why not defer your investment in it, until it starts to return to its previous good health. Find other funds that are performing and you think will continue to perform.

    Its fine to take a long term view, but that just not justify investing in funds currently under performing, unless you have an overwhelming conviction that they are just suffering some temporary setback, and are obtainable at very reasonable prices.

    Australian and Asian markets are performing well within the global context.
     
  14. AsxBroker

    AsxBroker Well-Known Member

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    Hi Sim,

    Broad based International funds I use are:

    Barclays International Shares;
    AXA/Bernstein Value Global Equity;
    T Rowe Price;


    Also Lazard Emerging Markets to add a little zestiness...

    Unhedged for Barclays as I think the aussie is still going to rise against the US as there economy has serious issues hence the Fed probably won't be raising rates for a while.

    Colonial has gone a little bananas with gearing, I don't think there is any other platform which lets you gear so many different funds. In the investment service (as opposed to super and pension) they will actually let you gear into their geared funds...

    Anyway, hope this helps you check out some funds :)

    Cheers,

    Dan

    This is not advice to invest in any investment. Speak to your FPA registered Financial Planner, Accountant or Tax Adviser before making an investment decision.
     
  15. crc_error

    crc_error The Rule of 72

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    Property has been hit hard in August due to the problems in the US, but it has also rebounded quite strongly. Both haven't been running during the same time, so the 'averages' they publish arn't going to reflect the same results.

    Both funds should operate in a simular, with the geared one having twice the exposure to the ungeared option.

    I believe gearing is vital for long term wealth, so I think you should choose geared options where possible. I have some of my mothers super money in the colliers geared option, and aren't worried about its short term volatility.

    If you read that Russel report I posted, you will see listed global property was the best performer over the last decade.. so its a strong sector to have exposure to.
     
  16. crc_error

    crc_error The Rule of 72

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    yes, they are both the same fund, except one borrows and the other one doesn't..

    GEAR GEAR GEAR!!!! baby!
     
  17. crc_error

    crc_error The Rule of 72

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    And have you seen how strong return its had over the last month? Are you going to wait till the horse bolts before you get in? If milk is on sale in the super market, do you wait till they put the price back to normal before you buy it?

    This is due to the dollar going up, fundamentally the fund it doing well.. I doubt our dollar will keep on rocketing like it has of late.. If you look at long term history, last years boom sector is usually not this years boom sector.. So why are you going to invest during times of inflated prices?

    Which who knows how long its going to last.. are we a rear vision mirror investor? Yes have exposure to these sectors, but don't ignore good investments cause they may be currently out of flavor..
     
  18. tasmo

    tasmo Well-Known Member

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    Colliers peaked on 25/2/2007 at $2.2822 and then declined through to 19/8/2007 at $1.5813, so it has had a pretty significant six month fall. Now it has recovered for about six weeks to $1.7942 as at 4/10/2007, still below previous high but maybe they have written off losses and could possibly maintain momentum. It may still be a little early to say the crisis has passed.

    My concern was have Colliers resolved problems that took the Fund down for six months.

    Oh really! The risk of the Aussie dollar rising is substantially greater than the dollar falling. Our economy is very strong with supply constraints and strong demand likely to see inflation passing RBA's upper limit giving rise to possibly two interest rate rises within the next six months. Even if the our rates stay on hold, there is the risk of USA FED dropping its cash rate as their economy slows through the housing recession. Any increase in our rates relative to USA will put upwards pressure on Aussie dollar as overseas investors will increasingly target out market for investment.

    Growth in China is forecast to run for decades (RBA has publicly supported this view) and this is what is driving Australian economy. That should answer your rear vision investor putdown. Do I have a flavour of month approach? Hardly, if your correct in the high Aussie dollar impacting on Platinum International then the outlook is not very positive for the Fund.
     
  19. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    ... and with the drought starting to have a real impact on food prices, I think we will see even greater upward pressure on inflation (and hence pressure on interest rates) locally ... thus potentially making the AUD even stronger against the USD in the short term.
     
  20. Compleks

    Compleks Well-Known Member

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    Now you guys are starting to lose me... :confused:

    Haha, it's all good. Thanks for all the advice guys.

    I'm not sure I have the full $10,000 available just yet to invest in two funds (I think the minimum for both funds is $5000).
    I don't want to select the $1000 entry with regular contributions, because my cash flow isn't very stable. I'd rather add what I can afford when I have the money saved up.

    I'll have to check my accounts when I get home to see how much I have available. I don't want to completely clean myself out either, as I like to keep a bit of a cash buffer for times of need.

    If you could only choose one of the two funds, which would you pick?
    Keep in mind it will probably only be a month or two before I have enough to open the second fund (hopefully).


    Cheers.