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rate this fund (growth)

Discussion in 'Managed Funds & Index Funds' started by voigtstr, 9th Apr, 2007.

  1. voigtstr

    voigtstr Well-Known Member

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    CFS MIF - Geared Share Fund

    past performance not a guide to future earnings... but 54% return?
    20% ytd? Is it just luck? 3 years of good returns... are there any negatives I havent noticed in the PDS?

    While I dont need an income fund at the moment to assist with investment property shortfalls, would my partner's spare money be better parked in the above fund rather than navra? (better than parking it in ING (she wont pay off my consumer debt so I'll continue paying my debts off over this year))

    Our aim is to use an income fund later when we purchase investment properties to fund negative gearing, but for now the above fund looks like a decent way to get growth.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I have money in the Wholesale version of the CFS Geared Share fund - growth can be quite spectacular at times.

    The thing to watch out with this fund is that because it uses internal gearing to magnify returns, it can tend to be rather volatile - with some pretty big falls as well.

    If you look at historic quarterly performance since inception of the Wholesale fund ... negative quarters in bold:

    1998:

    16.96%
    -11.87%
    0.34%
    33.14%

    1999:

    18.64%
    -12.26%
    -3.11%
    18.72%

    2000:

    -10.11%
    14.44%
    -0.95%
    5.62%

    2001:

    -5.26%
    24.18%
    -14.31%
    15.92%

    2002:

    -3.18%
    -9.63%
    -18.83%
    -1.50%

    2003:

    -10.21%
    17.96%
    11.41%
    13.87%

    2004:

    7.04%
    3.01%
    14.85%
    33.54%

    2005:

    4.47%
    1.53%
    25.36%
    6.17%

    2006:

    16.88%
    -1.76%
    -1.51%
    18.65%

    2007:
    10.85%


    ... if you bought in at the end of 2001, you would be pretty unhappy with the performance !!!

    I think it comes down to your plans for the money ... if by "park" you mean relatively short term, I don't think this is a particularly good fund for a short term view ... the volatility could see a pretty big dent being made in your returns over the timeframe you need the money back in.

    Unless you time them perfectly, highly volatile funds may need a bit of time to come good ... and when they do you will generally do well ... but in the short term you may see quite negative returns.

    This fund has been known to jump more than 5% in a single day (in either direction !!!) ... so timing it can be difficult !!

    Personally, if I expected to need the money within the next 6 months, I'd leave it in ING. Otherwise, Navra shows pretty stable returns over the medium term (6-12 months), and I'd tend to only invest in something like the geared share funds if looking at periods of well over a year.

    Just my thoughts anyway.
     
  3. voigtstr

    voigtstr Well-Known Member

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    Thanks Sim. I think it looks like good value, if I'm putting 1k a month (more with overtime or shift allowances) a drop in unit price gives better buying value (more units).. it looks like a fund to hold longer term as you said. I would just have to be comfortable riding out the volatility.

    Longer term, 2-3-4 years do you think the stock market will be losing steam? If so would putting 1k a month provide even better buying value, if one were to wait for the market to rise again. (and then after building all that growth perhaps move it across to an income fund like navra, + property) basically I have to get my investments started once I pay off debts, and accelerated growth like the cfs fund looks like a reasonable vehicle for this.

    For parking money shorter term (ie my wifes sale of motorbike proceeds, and left over wedding money), navra looks like a better option (better than ING)

    (by the way she bought the bike for 3500 2 years ago and sold it for 3500, pretty good eh)
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Dunno ... my crystal ball seems to be broken at the moment ... sorry.

    The question is how much growth would you miss out on if you were to wait ? I can't answer that - only history will give you the answer.

    I think you have to look at the fundamentals - do you think the market (or that segment which the fund in question invests in) is actually over-valued (or at least fully-valued) ? Do you think the economy will shift into neutral or reverse and put pressure on company earnings growth ? Do you think there are any other major factors that will prevent the market from at least modest rises over the next 2-3-4 years ?
     
  5. voigtstr

    voigtstr Well-Known Member

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    Cheers and thanks for that, sorry for asking you to bring out the crystal ball.