Managed fund vs. LOC and let broker invest for you

Hi guys, just wondering if anyone can give me come advice. Looking to get back into the market with longterm growth in mind and am wondering wether a managed fund (like CFS geared) is the way to go, or should I give my money to a broker to manage for me. My goals are growth, with 50k to play with. I can hold for 5 plus years.

 

Hi Hunt,

A managed fund can invest into many, many individual shares, eg, a broad Australian share managed fund could invest in 300 or so Australian shares (how much would this cost in brokerage?). By broker, I assume you mean going to a stockbroker? They are only their for the deal, like a realestate agent, once your deal is done they move on to the next. Naturally if you want to buy and sell, they are happy to help taking a cut of your investment for the assistance. The more you buy and sell, the richer the broker gets and the more you cut into your potential profits.

Saying that, if you pick a few good stocks you could potentially out perform a general benchmark and you have more control over which stocks you are investing in whereas in a managed fund you don't have this control.

The doomsayers believe that there isn't much growth for the next few years, saying that, it is probably a better time now to get in now rather than two years ago, though only time will tell.

Cheers,

Dan

PS This is general information, I don't know what the economy is going to do in the next 10 years.

 

Thanks ASX, I have heard of brokers handling peoples portfolio's or is that some kind of custom managed fund, where the portfolio is managed by a particular person on behalf of a client?

 

Hi Hunt,

Sounds like a Separately Managed Account (SMA) or Individually Managed Account (IMA). Whomever manages your money will charge you for their expertise.

Cheers,

Dan

 

If you want diversification without too much of a management expense why don't you have a look at an ETF? Something like STW or the new Vanguard Australian fund ... these track an index and have a lot lower fees than a managed fund (the new vanguard one is about 0.27% fees).

Just a thought ...

Regards,

Jason