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Managed Funds Allocation.

Discussion in 'Managed Funds & Index Funds' started by Compleks, 10th Sep, 2008.

  1. Compleks

    Compleks Well-Known Member

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    I'm after some fresh input on an old question that I've asked before.

    I've finally got my account with NetWealth set up. At the moment I hold three managed funds.

    CFS Firstchoice CFS 452 Geared Aust Share Fund
    CFS 1st Choice - CFS Colliers Gear Glob Prop Sec
    Colonial First State Property Securities Fund

    Totaling about $8000 (down from $15000 when I opened). I'm happy to start fresh and do whatever it takes to turn things around.
    (not sure I want two property funds, but I'm not fussed)
    I want a good selection of funds which will offer good market exposure. I plan to set up a regular re-investment plan and contribute as much money as possible each month/week.

    I'm keen to invest in some high growth assets and am happy to undertake some risk (would like to see some positive returns though. All I've seen is depreciating funds so far).
    I'm looking at this as a long term strategy. I might like to access the money in 10 years or so and maybe start to turn out some passive income eventually.


    Any advice on fund selection and re-investment allocation would be great.
    In fact, and advice, comments or criticism of any kind would be great!

    Thanks everyone.
     
  2. crc_error

    crc_error The Rule of 72

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    here are a few areas to consider investing in:

    Australian Large shares
    International Large shares
    Australian small companies
    International small companies
    Property listed
    Property unlisted
    Fixed interest
    Cash
    Bonds
    Hedge Funds
    Global Infrastructure
    Global listed property


    If your looking for long term growth, prehaps avoid fixed interest, cash and bonds.

    read this Presentations page it will give you some ideas on selecting managed funds..

    My personal allocation is as follows.. it could be a starting point for you to taylor something for you..

    15% Australian Large companies Value
    15% Australian Small companies Value
    15% International Large companies value
    15% International Small companies value
    20% Global Properties securities
    20% Global Infrastructure
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi Compleks,

    You might want to also diversify risk by investing through a mix of fund managers rather than just the one fund manager.

    Cheers,

    Dan
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Actually, some of those CFS funds are actually managed by third party fund managers ... 452 and Colliers. CFS is effectively a platform these days - with both CFS managed funds and externally managed funds (and some blended multi-manager funds).
     
  5. Young Gun

    Young Gun Guest

    I wouldn't switch out of any of those investments you have (as long term their fine you've just be hit hard over the last 12 months), I'd look to add another manager or 2 through regular investments.

    If you want high growth I'd add a small companies fund or a concentrated equity fund.

    I'd ignore any infrastructure, hedged, bond/fixed interest funds. As you've got a 10 year time horizon and in theory the funds you have plus the ones I suggested should provide a better average return.

    Personally, with my managed funds I'm directing 100% of my regular contributions to the CFS geared share fund.
     
  6. AsxBroker

    AsxBroker Well-Known Member

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    Hi Sim,

    I see what you mean as those funds are distributed by CFS (452 and Colliers), so it's three different fund managers, a bit like the Macquarie Morgan Stanley Global Franchise.

    Redistribution is a great way to pick up extra fees ;)

    Cheers,

    Dan
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Generally you are correct - but interestingly, when I researched some of the CFS Wholesale funds which are managed by third parties, their MER is often pretty much the same as investing directly via the direct version of the fund. I suspect that CFS negotiates a discounted management fee so that they can charge the same MER to the investor - gives you less reason why not to use them for everything.
     
  8. crc_error

    crc_error The Rule of 72

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    I'm sure when I looked Platinum funds are more expensive via CFS.

    Not that you can even access all of them anyway! bar one!
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Yes, it does depend on the fund manager.
     
  10. Compleks

    Compleks Well-Known Member

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    So I'm thinking I should invest into a global share fund, and then maybe a small companies fund (Australian?)

    That way I would have exposure in Australian shares and Property aswell as International Shares and Property.
    and the small companies fund ontop of those four.

    Does that sound like a reasonable plan?

    Any recommendations? Would Platinum be a good choice as far as international shares are concerned?
    What about the small companies fund?

    So many options.
     
  11. crc_error

    crc_error The Rule of 72

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    I personally choose Platinum International Brands fund for large companies, and Hunter Hall global ethical trust for global small companies.

    Reason why I think its a good idea to have global exposure now, is if commodities slow, the ASX will probably not do as well. Australian economy is highly weighted towards commodities. Having those two global funds will give you access to many other industries. Plus with our dollar falling, this will generally be positive for unhedged (currency) global funds. Platinum Brands has actually done very well over the last month.

    If your looking at australian small companies, check out the UBS small companies fund (which I'm personally not in, but do like that fund) and I think SIM was invested in the CFS small companies fund.

    You have global property which is great, but I think having australian listed property is a sub section of Australian shares, a but like australian banks/finance sector or retail sector.. if you want australian property exposure, look at direct unlisted funds like Cromwell or Orchard direct property funds, they own direct Australian commercial property.. rather than listed property business's. These two unlisted funds are fairly stable in their unit pricing and will also provide you with good diversification. Netwealth gives you access to these.

    Your colliers is great giving you good global listed property exposure.. the Australian listed property sector is dominated by too few companies, so one goes bust (like centro) and the whole index dies.. (I learned the hard way here losing heaps of $$$) at least with the global one, the fund manager gas far more listed companies are available to choose from.
     
  12. Compleks

    Compleks Well-Known Member

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    Thanks mate.

    There is just so much to consider. I might just bite the bullet and buy into the two global funds you suggested.
    I'll of course try to do my research first, but in all honesty I don't understand enough for the research to be very meaningful :(
    All I really know how to research at this stage is checking out previous performance, average returns and trying to compare some similar funds.

    I just want some broad exposure over 4-6 funds so that I can sit back, make contributions and watch things grow over the next 10 years...

    You have all been very helpful as per usual.
     
  13. crc_error

    crc_error The Rule of 72

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    If your looking at global Infrastructure, I choose AMP global core Infrastructure fund Core Infrastructure Fund - AMP Capital Investors

    Macquarie also has one, but I'm a bit off Macquarie at the moment.. didn't like the way they treated me with all their errors and unfair charging methods when I invested in equinox asia and multi-stratergie fund.. plus I have noticed the AMP fund has been far more stable in pricing over the recent market turmoil.
     
  14. crc_error

    crc_error The Rule of 72

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    I think if you have a choice of those few funds, you will have a well balanced fund selection. hopefully they will compliment each other over the years evening out volatility.

    Hunter Hall and Platinum are smaller fund managers, and are not what I call large titanic funds.

    At least that's what I'm hoping for with my personal selection! Time will tell..

    Regular contribution will also average your way in, and you will benefit from market dips as you build up your holdings..

    I have personally not geared or used a margin loan in the current climate..
     
  15. Compleks

    Compleks Well-Known Member

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    Okay, so I'm just thinking (typing) out loud here.

    I think I'll keep the funds I have. All three of them. Ontop of that I want some global share exposure (Platinum International Fund, I was thinking).
    Then maybe a small companies fund (global or aus? Not sure about this yet...)

    Also, will NetWealth give me access to the Navra Blue Chip Australian Share Wholesale Fund? I was thinking of maybe investing in this fund aswell.

    Once I have this set up I will need to consider my contributions and percentages for reinvestment.

    Cheers.
     
  16. Compleks

    Compleks Well-Known Member

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    What are your thoughts on the Vanguard Emerging Markets fund?

    Or even the Vanguard International Shares Index Fund (instead of the Platinum fund)?

    What does hedged mean?
     
  17. AsxBroker

    AsxBroker Well-Known Member

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    Hi Compleks,

    I don't know much about the Vanguard Emerging fund but I am a fan of their Aussie, International and Property securities index funds.

    The difference between Vanguard International Shares Index and Platinum is about 1.18% pa on wholesale (0.36% pa and 1.54% pa MERs respectively).

    It is very important to remember that they both have very different management styles (ie, Vanguard doing passive index investing and Platinum choosing companies to invest in based on analysis).

    Hedged means that the fund is "hedging" it's foreign exchange risk so you don't lose your returns due to fluctuations in the exchange rate.

    Cheers,

    Dan

    PS This is general information, before making an investment decision speak to your FPA registered Financial Planner.
     
  18. Compleks

    Compleks Well-Known Member

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    I've had a bit of time to mull it over.

    I was thinking of going for the Vanguard International Shares Index Fund aswell as their Emerging Markets Fund.

    I was thinking (not sure if it's possible yet) of investing $1000 into each fund as a start and making regular contributions across all funds (hopefully about $600 - $800 each month).
    I'm not sure yet if I will invest evenly across all 5 funds, or if I should concentrate my investments into a few of the better performing funds (not even sure how I would make that call).

    Also, is now a good time to be investing into more funds?
    I'm not keen on trying to time market entry or predict performance etc... Since I'm in for the long run, I figured it shouldn't really matter when I enter.

    Cheers.
     
  19. crc_error

    crc_error The Rule of 72

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    Compleks, you should invest in all market conditions. Setup a regular monthly amount, and invest on a monthly basis. Now is the time your picking up stuff at 20-30% discount, so why would you not be buying now? If you believe the funds you have choosen will perform over the long term, invest NOW.. don't try to pick the bottom, and end up missing the upswing.

    I hardly think we will see much more falls, as the prices reflect all the negativity out there already. Historically markets are very cheap at present if you look at their price to earnings ratios.

    Dont go buying up big now, just average your way in slowly..
     
  20. Compleks

    Compleks Well-Known Member

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    Thanks mate, that's what I was thinking. Just needed some re-assurance.

    Now, I'm not sure whether to go with the Platinum or Vanguard International fund?
    and if I go Vanguard should I go with the hedged or un-hedged version?

    The Platinum fund seems to be doing better over the long run, but I'm not really sure how to compare the two funds.

    Ahhhhh. Options, decisions.