Managed Funds Managed Funds Allocation.

Discussion in 'Shares & Funds' started by shouldisell, 10th Sep, 2008.

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  1. crc_error

    crc_error The Rule of 72

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    well mate thats your decision! You know which fund I choose ;)

    Hedging costs money, like insurance for a car, so over the longer term you will do worse with hedging.. but if you like the currency fluctuation protection, go for the hedged currency.

    Lately our $$$ has dropped so hedging would have worked against you..

    You might want to watch this webcast Freeman Fox - Investor Update April May 2008 Web Cast 10 Tactics for testing times.. might give you some ideas to help you with your strategy.
     
  2. shouldisell

    shouldisell Well-Known Member

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    Thanks to everyone for all the help.

    Not just in this thread, but in general.

    NetWealth is processing my new investments. Platinum International Brands Fund and Vanguard Emerging Markets.
    I put $1000 into each fund.

    Do you think I should re-structure my portfolio and try to get an even balance across all 5 funds?
    Or with my (hopefully regular) contributions should I put a higher percentage into these two funds to build them up a little?

    I'm about to set up my re-investment plan. Not sure if I should keep the investments even across the board, or if I should reinvest a higher percentage into certain funds...?

    Thanks everyone.
     
  3. shouldisell

    shouldisell Well-Known Member

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    Here's my re-investment plan at the moment.


    Cash Account -- 15.00%
    Platinum International Brands Fund -- 20.00%
    Vanguard Emerging Markets Shares Index Fund -- 20.00%
    CFS Firstchoice CFS 452 Geared Aust Share Fund -- 15.00%
    CFS 1st Choice - CFS Colliers Gear Glob Prop Sec -- 15.00%
    Colonial First State Property Securities Fund -- 15.00%
     
  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    Have you actually looked at the unit price on the CFS Colliers Geared Global Property Securities ?

    $0.14 might seem like a bargain, but considering it was at $1.00 only 18 months ago ... I'd think about re-assessing your exposure there ... I suspect that fund will be killed of in due course (might be wrong).
     
  5. crc_error

    crc_error The Rule of 72

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    yeh, I wouldn't be in geared funds at the moment.
     
  6. shouldisell

    shouldisell Well-Known Member

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    Hmm, I'm clearly not very good at this.

    Do you think I should get out of those funds completely?
    Or just focus my contributions into the other funds and let the geared ones sit for a while?

    I've lost a fair bit of money already. I've lost track, but it's probably 40-50% of my initial investment... :(
     
  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    You need to consider your goals and timeframe. If I remember correctly, you are young and have no other large financial commitments at this point ? You won't be needing the money you are investing in the near future ? You have plenty of time available and an opportunity to buy in while the market is down.

    You do need to assess each of your investments to work out whether you think they have a reasonable chance of recovery in the medium term and good performance in the long term.

    I disagree with the implication in crc's statement "I wouldn't be in geared funds at the moment" ... if you are already in geared funds, I think now is completely the WRONG time to be getting out (that time passed months ago). Instead, if you believe there is still merit in holding that investment over the medium-long term (eg good quality companies held and a sound management methodology), then I would be continuing to contribute to those funds as the market drops.

    Platinum International Brands Fund has done pretty well of late - especially with a falling AUD, it has come back strongly and is now only 10% down over the past 12 months (9.2% up this financial year!).

    Vanguard Emerging Markets Shares Index Fund - I don't know much about this fund, but it is quite diversified (600 listed shares across 20 markets), so as a higher risk growth option, may well do okay.

    CFS Firstchoice CFS 452 Geared Aust Share Fund - this fund invests in largely blue chip Australian shares ... some of which have taken a battering, but have (arguably) been oversold. Geared share funds are volatile and fall much further than non-geared share funds as they manage their risk profile and gearing ratios internally. I wouldn't be selling now at or near the bottom of the market, I would be continuing to add to the fund as you have been doing.

    CFS 1st Choice - CFS Colliers Gear Glob Prop Sec - this is the fund I am concerned about. It invests in listed property, which has really struggled as as sector of late, especially with credit problems meaning that some deals are falling over and some listed trusts are in trouble. The global nature of the fund means that there is some diversification - but the credit problems are global, so everyone is suffering. The internal gearing just compounds the problem, as does a volatile AUD, which plays havoc with hedging strategies (this fund is hedged). The fund is far too small (less than $10m) to be able to trade with any efficiency - costs are far higher per unit for a small fund like this, especially with costs like gearing/hedging/etc. I just see too many downsides to this fund and not enough upside. This is just my opinion though.

    Colonial First State Property Securities Fund. Property securities have taken a hammering over the past 12 - 18 months, but given that there are some good quality trusts out there paying good dividends - yields have skyrocketed with the market dropping as much as it has. Sure, a downturn in the economy will hurt returns, but nobody is suggesting we will see a bad recession here, so any downturn should be limited. I wouldn't have a problem with adding to your position here - provided that you understand that listed property is NOT primarily a growth strategy, it is an income strategy (it is aiming for growth with the high levels of gearing that go with it which got Centro into trouble). I think there will be further volatility in this sector for a while yet - but I do think that opportunities are there for those willing to hold on and buy cheap (ie if you can afford to wait for a few years for your cheap investments now to recover in value).

    My advice to people in general is:
    - if you aren't in the market yet ... wait until things settle down before entering, it is far too volatile right now.
    - if you are in the market and don't need your money in the near future ... just hold on, it will recover eventually, now is NOT the time to be selling.
    - if you are facing margin calls and have cash buffers available that you won't need for other purposes, pay down your margin loan to maintain your LVR (do NOT buy additional shares/units).
    - if you are facing margin calls and don't have spare cash, sell some of your holdings pre-emptively to maintain your LVR in the buffer zone so you don't actually get forced to sell down out of your buffer completely. It's about survival now and trying to hold onto as much of your assets as you can (ie sell the least number possible).
    - if you are forced to sell, sell off your worst performing assets first (in particular, those which you don't feel stand much chance of recovery in the short to medium term). Negotiate with your margin lender, not all of them will require you to sell out of your buffer zone completely, have a plan in place for how you will deal with the situation if it arises - don't let your margin lender have control, they will only act to protect themselves and not you.


    As a general statement about selling out of investments as they drop - if you are going to sell - you need to do it early, and not wait until near the bottom. The main question you need to ask yourself about each investment is - can I use this capital more effectively in other investments and make more money ? If not, then leave the money where it is. If so, then consider selling and re-allocating the capital.

    The only fund you hold which I would consider doing this with is the CFS Colliers Geared Global Share fund - BUT only if I considered that the recent rapid drop in unit price didn't stand any chance of reversing in a hurry :(
     
    Last edited by a moderator: 12th Oct, 2008
  8. crc_error

    crc_error The Rule of 72

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    you make some good point SIM.
     
  9. Selwyn M

    Selwyn M Member

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    Riding managed funds in current bad times...

    Sim,

    Thanks for those points.

    Very long term reader - first time poster out of the bag here!

    Property is my preferred flavour, having started the trail in a small way. 3 years ago I started putting in regularly into VGT - Hunter Halls managed fund - this is my better than super / emergency cash - savings investment scheme - so I don't need the funds immediately - but one day could sell out all or some to prop up my PPOR mortgage or assist with further IPS. Currently this managed fund is being hammered - down 30% in last 12 months!

    So based on what your're saying, is it still best to stay in if I have a medium to long term view plan with this fund??

    Also I do regular monthly top ups, should I be stopping this until the dust settles, or just continue as usual and await for it move forward again in 6 - 12 months or longer. Based on the dollar cost averaging and compounding mindset overtime if you ride the tied in good and bad.

    So please help to alleviate the panic and fear would be appreciated. At the moment it is giving me the never touch any shares again feeling - nightmarish@ - although I don't have huge dollars in this one - any loss is a bad one for anyone! As it is managed fund its easier to lose interest and not even follow it etc.
     
  10. crc_error

    crc_error The Rule of 72

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    Selwyn, just stick to you regular investment plan into hunter hall. They are a good manager and I'm sure the fund will return some good results over the long term. With regular contributions made now, you will be getting some very discounted share exposure. When the market turns, you will enjoy a nice profit.

    There is no need to panic, market crashes are part of investing, and are healthy. Your now getting in at 3-4 year lows, so you can't go wrong with that!

    If you watched 60 mins tonight, Kevin Rudd conceeded that property also may be exposed to a correction as well, so property certainly isn't a investment any more secure than shares.

    Only suggestion I would make, is not to gear in this current market. which your not.
     
  11. Simon Hampel

    Simon Hampel Founder Staff Member

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    As crc said - you are now buying into this fund cheap - it is a great time to buy if you won't be needing the money in the next couple of years.

    I would NOT be selling out now (far too late for that) ... hold on, keep making your regular contributions and wait for the recovery - it will happen eventually.

    I wouldn't be putting all of my money in the market though - make sure you have good cash buffers ... the economy is in for a bumpy ride and you need to make sure you have backup funds to keep you going should things get difficult.
     
  12. shouldisell

    shouldisell Well-Known Member

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    Wow. As usual you guys deliver :)

    Thanks for the detailed response Sim. You're way too helpful.

    I'm thinking that I might just reallocate my contributions to the CFS Colliers Global Property Fund across my other funds. I guess I'll just sit on what little I have left in that fund and see what happens. I don't think it's even worth while extracting what's left.

    I'll try to keep up with my regular contributions and think positively about the future of these funds.

    Thanks everyone.
     
  13. crc_error

    crc_error The Rule of 72

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    Compleks, just stay focused and continue with your investment plan.. remember you have a 7-10 year view.

    I personally wouldn't continue to contribute into the geared funds, and prehaps open a new 452 ungeared fund. The world economy is slowing down, so now is not the time to be geared. At least you will be able to sleep better with lower volatility!
     
  14. Selwyn M

    Selwyn M Member

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    Thanks guys, you have re-assured some dignity here, and can only be thankful I aren't geared in at them moment.

    Are there any recommended tools or software that will give me a more accurate realtime snapshot of my absolute positioning, taking into account all my contributions from day one etc. Or can I only work this out directly from the fund manager, when I get my statement. Or do I need to manually set something up in spreadsheet. I am yet to obtain login details to log into the client area - this may have the answer to this question :)
     
  15. crc_error

    crc_error The Rule of 72

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    looks like the markets may have bottomed.. I think when I called the bottom on Friday may be correct! Either way I was buying on Friday, and now it looks like I will enjoy a instant profit!

    Best time to buy is in gloom. Not when the cattle herd is all trying to get back into the paddock.
     
  16. Simon Hampel

    Simon Hampel Founder Staff Member

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    I think it is far too early to know whether this is actually the bottom or not. You may well be correct and the market is showing rather a lot of optimism at the moment - but one or two days of strong rises on the back of a week of very strong falls does not make it a recovery - just a bit of a bounce. We're still a LONG way below the long term moving averages, I won't consider the market to be in recovery until it goes up a lot more than it has so far.

    If you don't care about timeframes or the time value of money, then it doesn't really matter when you buy. However, buying into a falling market is very risky if you aren't extremely careful (and is financial suicide if doing it with borrowed money).
     
  17. crc_error

    crc_error The Rule of 72

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    Sim, correct, I'm not using borrowed money. I'm just maintaining my monthly contribution into the market, and buy up the odd bargin like CBA which I'm happy to hold direct.

    Personally I don't want a recovery, I'm happy for the market to remain in a bear market, and give me time to buy up more funds, then i'll be ready to benefit from the new bull run.

    My holding is currently to small to have any real benefit from the next bull run.

    This is cause I bought a IP earlier this year.
     
  18. crc_error

    crc_error The Rule of 72

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    This is why I invest via netwealth. Their reporting clearly shows your actual position at any time for the funds/shares your in.
     
  19. shouldisell

    shouldisell Well-Known Member

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    I am liking the NetWealth platform alot.

    I'm probably not even aware of half the features and how they work. But the layout and easy profile management is great!
    Thanks for recommending it :)
     
  20. Selwyn M

    Selwyn M Member

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    I am not familiar with Netwealth. Do you have a link? and what are the costs involved to use it?