Hi can anyone advise how to learn about managed funds and how they operate and what to look for etc. any ideas?
Visit a financial planner ... they will generally know the ins and outs of managed funds as thats their main investment tool ...
Thanks Matrung Yeah trouble is finding a good financial planner who knows his stuff and not just collecting the commission once he is gone. I have not found one yet any good ones? Spoke to one at Macquarie but reading about their deals maybe they looking after themselves not me.
Hi Trui What are the key points you want to understand? Maybe we can all workshop them on a generic basis for everyone's benefit? Of course for information about specific funds you'll need to read the relevant product disclosure statement. Cheers N.
Hi Nigel thanks for the reply. Yes i think a better understanding of the PDS would be a good start plus how does it benefit the investors, pros and cons of how long should we be in there and understanding the managed funds fees etc. Great to invest for 5-10 years and then realise that you are not going forward or have lost money. What gearing level be appropriate for first time investors, unless we study finance we don't understand it fully hopefully relying on the expertise of the financial planner to tell us everything and something we don't know. What does anyone think?
Right here is where you need to be. If you have questions - just ask ... there are lots of people who invest in managed funds here. The "how they operate" questions are easy. The "what to look for" questions are not so easy - because the answers depend very much on what you are trying to achieve and your own goals and such.
Again, very difficult to answer - it depends on what you are investing in and your own personal situation. I've seen figures quoted that the average margin loan is around the 40 - 45% LVR (loan-to-value ratio) figure. I know that Steve was suggesting to people investing in his NavraInvest funds that they aim for a max LVR of around 50%, which should (hopefully) be enough of a buffer to see people through an extended downturn or stockmarket crash.
Im sitting on a 62% LVR with my managed funds and it's not fun. No spare cash. Lets hope there's no crash before my savings drop it down to the mid 50's.. This is what happens when you buy a house and get the maths wrong!
Glebe I've been reading some commentators suggesting this year will have a correction in late April or May (a bit like last year, you'll recall it was in May). But then continue upwards to 6000-6400. Who knows? Not me.
Triu, Coming from a novice viewpoint myself I found the best way to research funds was: 1. Figure out what your goal was first and why you were investing. If you want capital growth over the long term you would select different funds than if you were looking for high income. 2. I found the next place to look was someplace like investsmart.com.au or I preferred directaccess.com.au. Their advanced searches where a little better. You can search by performance over x years and by either growth or return. 3. Narrow down your choices then to the funds which seem to give you the result you want. If you click on each fund you can get a snapshot of the results each year etc. That will give you a good comparison. Just be careful about the results figures. They all use % based on if you reinvest dividends from day one. It can distort the results so that if it says income of 5% average does not necessarily mean that what you will get. I found that you need to download all the unit price history for 6 to 10 year and the distributions and then work out what would happen if you invested say $100K in year 1. That way you can accurately see what your result may be. 4. Look for consistency in results and look for those funds that handled big drops in the market well. That way you can elimate volatilityand get a feel for what you can expect as a return. 5. Keep reading and learning from others around you such as members of this forum. You can never learn too much or ask too silly a question. Hope this helps. Good luck
My LVR has dropped to 58% and no correction yet. Hopefully I can get it down to 55% in the next couple of months
Hi Glebe. Are you reinvesting your returns or taking distributions in cash? Personally, I take distributions as cash, then I work out approx how much interest is payable to applicable loan connected to the mgd fund, and pay it back that way, i.e, my interest is only being capitalised 3 months at a time but then paid. I also like to pay a little bit extra on the margin loan, but that's just me. Helps with my SANF. Of course this only applies when there are positive returns.
Hi Smarts, I've prepaid my loan in advance each June for the last few years, and paid that interest in cash. Then re-invested my dividends throughout the years. This time around I'll try and capitalise it, whilst continuing to reinvest the dividends. Your approach seems good also, I'll think about it more.
Glebe Would you care to elaborate on this a little bit? You finding 62% too high for psychological reasons, or are you investing in lower lvr funds and getting margin called? What maths did you get wrong? Thanks for your replies mate, hopefully can help those of us a little wetter behind the ears!
