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Which fund for regular income ?

Discussion in 'Managed Funds & Index Funds' started by Smartypants, 8th Jan, 2007.

  1. Smartypants

    Smartypants Well-Known Member

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    • Great post Sim, really appreciate your input.
    Sorry if I'm hijacking this thread (please move if you see fit to).

    I've also been thinking about selling out of the NavraInvest US fund (after current distribution of course :D ) and putting those funds (about $100K) into a property fund, probably with CFS.

    Was hoping to pick up a few tips/bit of advice on which of their mgd funds is a good one to opt for.

    The funds I'm using are borrowed, so what I'm looking for is a mgd fund that pays income (peferably every quarter, like the Navra funds), as well as showing a bit of growth.

    Also, if I go ahead with this, do I advise someone at Navra to sell my holdings or do I advise my margin lender (BT) to do this?

    P.S Any advice given will be taken on board as just that, advice. I will obviously do my DD. I'm hoping to just save a bit of time.
     
  2. gad

    gad Well-Known Member

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    Download a "Withdrawal Request" form from the Navra web site, fill it in & send it to your Margin Lender. The units will be sold & the funds will be used to pay down your margin loan.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The CFS property securities funds (there are several, including an index fund), all pay quarterly distributions, except for the international property securities fund, which pays twice-yearly.

    Remember though, that some of the LPTs that these funds have invested in have shifted focus from being reliable income generating funds towards becoming more growth focussed - which has seen them become more aggressive and take on higher risk. Many are overweight in Westfield, which could be a good thing - could be a bad thing.

    Not saying don't do it - just be careful and do some DD about how the funds are invested, and what the risks to you achieving your goals are if you invest in them.
     
  4. Smartypants

    Smartypants Well-Known Member

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    Thanks Gad and Sim for the feedback.

    Will research CFS funds ( & others).

    I may even just keep my holdings with the Navra US funds yet, or transfer it over to the Aust. fund where I have a much larger holding. Just looking for that diversification though.

    Thanks again.
     
  5. matrung

    matrung Member

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    Take a look at the CFS Deutsche Paladin Property Trust .. it's been a favourite of mine for years.. very consistent better than averange income plus good capital growth .. it's alround excellent
     
  6. Smartypants

    Smartypants Well-Known Member

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    Hi again.

    Have been looking at the Colonial First State site and noticed that the CFS Property Securities Fund and the Deutsche Property Securities Fund appear to be very similar in the way they invest.

    Due to this fact, would there be any sense in investing in both of them, or should I opt for one or the other.

    Am looking at going into the Colliers Int'l Property Securities Fund as well, but wanted some feedback as to buying into the 3 funds or just the Colliers and 1 of the others or both.

    Also, have I got my facts correct about buying into these funds wholesale (i.e $100K or more). My understanding is that if you buy in wholesale, there are no entry fees, BUT........are the management fees also lower?

    Any info on the above would be appreciated.
     
  7. Smartypants

    Smartypants Well-Known Member

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    In regards to above post, I also meant to ask; if I buy into these funds directly, can I later on somehow link the buyings to my already existing margin account or would I be better off depositing my money into the margin account and buy through that.

    At this stage I don't want to get a margin loan against these funds, but may decide to at a later date.
     
  8. matrung

    matrung Member

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    Yes. indeed if you buy the funds wholesale, then you would need 100,00 in each to apply. You get reduced managed fees and no entry fees. However if you don't have the funds to go wholesale on all the funds, why not try using a direct fund provider like comsec or investsmart.com where they will rebate you the 4% entry fee's on managed funds and investsmart.com even rebate some of the ongoing commission they recieve which ulimately reduces your management fees.

    Indeed, you can generally attach the already bought funds into your existing margin account at a later date. Just contact your margin provider and they should be able to send you the appropriate forms
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You are correct - no entry fees for Wholesale AND management fees are lower too. I suggest you go wholesale if you can afford the $100K minimum investment (which it looks like you can).

    And yes, you can move your funds into your margin account at any time, so there is nothing to stop you investing directly now and moving them later.

    Having a quick look at the CFS WS Property Securities vs CFS Deutsche WS Property Securities - I think you are right in that they largely invest in the same LPTs, the main difference would be in investment style. One thing I haven't checked is how fees compare between the two - there may be higher fees with the Deutsche fund due to it being a third-party manager ? You'd need to look into this - I may be wrong there.

    Colliers invests in completely different markets to the others (which are Australian only - although some of the LPTs in Australia do invest overseas).

    So if you want to invest in Colliers as well, I would suggest Colliers + one of the other two (not both) ... unless you want to hedge-your-bets between the two (your decision).

    Just remember that with Colliers you have currency exposure as well - higher risk (even with currency hedging in place). It is also a much newer fund, and not proven over the long term yet - so caution also required.

    I have a sizeable amount in the CFS WS Property Securities fund, and will soon be investing in the Colliers as well. Not making recommendations here - just declaring my own interests.
     
  10. Smartypants

    Smartypants Well-Known Member

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    I was under the impression that the $100K could be spread across different funds, not EACH fund.
     
  11. Smartypants

    Smartypants Well-Known Member

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    Sorry to be a pain.

    Another thing I just noticed; why are figures (returns) different for the Investment funds and the Wholesale funds, i.e, 1yr return, 5yr return, since inception etc. Thought they would be the same with the wholesale funds just having the benefit of no entry fees and lower management fees (as discussed above).

    Also..............:) , are the Colonial First State Funds and the Colonial Firstchoice funds one in the same thing. I'm getting confused when trying to cross reference the funds (application number) with my margin lenders' (BT) site.

    It's all confusing :confused: . But I'll figure it out.
     
  12. matrung

    matrung Member

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    haha .. yeah it can be all abit confusing ..

    Colonial First State FirstChoice is Colonial First States managed fund platform ... where they offer a range of managed fund investments from different fund managers.

    the reason for the difference in returns is basically the difference in management fees. because the management fee is taken basically from the gross return of the fund it stands that if the manager fee is less then the net return should be greater ie.

    retail fund - management fee 2% - fund gross return 10% net return is 8%
    wholesale - fee 1% - fund gross return 19% net return is 9%.
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    It's also a little more complicated than this too - the retail and wholesale funds are separate entities and have different inflows/outflows as people apply for and redeem units at different times. It's not as simple as saying the wholesale fund is just the retail fund with lower fees - they are actually different funds.
     
  14. matrung

    matrung Member

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    This is very true sim .. very true indeed.
     
  15. Smartypants

    Smartypants Well-Known Member

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    At the thought of sounding painfully obvious, can someone confirm if these calculations are correct.

    Let's assume one invests $100K into a mgd fund. To use round figures, we'll assume this fund pays 10% distribution and has 10% growth for 3 straight years, and I am being paid the distribution (not reinvesting).

    Does this mean at the end of yr 1 my holdings would be $110K and I would have been paid $10K, at end of yr 2 my holdings would be $121K and I would have been paid $11K, at the end of yr 3 my holdings would be $133,100 and I would have been paid $12,100.

    As I said, it looks very obvious, but my confusion arises from the different sites that include figures when dividend/distribution is reinvested.

    I realize my figures haven't included any management fees etc.
     
  16. Nigel Ward

    Nigel Ward Team InvestEd

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    If you're not reinvesting the distributions won't you start each year with $100k and get $10k distribution at the end of each year?

    Sorry maybe I'm missing something. You can't get compounding growth if you don't reinvest the distribution to compound...
     
  17. Smartypants

    Smartypants Well-Known Member

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    Hi Nigel, Thanx for the reply.

    In my example, I was assuming 20% growth (each year) of which 10% is paid as a distribution and 10% was added to the fund.

    Isn't that how some funds work?
     
  18. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    That's pretty much correct ... here's how it works:

    Your $100K investment at the end of year 1 would have grown to $120K ... with $10K of this being distributable income. Post-distribution, you get $10K in cash, and your investment value drops by approximately $10K to $110K (the other $10K comes from unrealised gains ... growth).

    End of year 2 value is $132K, which drops to $121K after an $11K distribution

    End of year 3 value is $145.2K, which drops to $133.1K after a $12.1K distribution.

    ... which is what you had calculated.

    If you were comparing with figures that include reinvesting distribution, then it's quite a bit more complicated - you need to calculate the number of units you'd originally purchased and then use the post-distribution unit price to work out how many extra units you get at the end of each distribution.

    This (calculating reinvested distributions) is the only accurate method for comparing managed funds over more than a single distribution period - because different types of funds will pay out different amounts of distribution ... eg Navra funds don't generate a lot of growth in unit price from quarter to quarter because most of the profits come from trading the shares and is paid out in income ... so it's not fair to compare that to a fund which holds long term and you have a lot of unrealised gains.
     
  19. Smartypants

    Smartypants Well-Known Member

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    Really do appreciate the different input here. Thanx again.

    Ok, things are starting to make sense.

    Next point of confusion for me is; How come...............on the CFS site, when you look a particular category of fund, you are presented with a variety of funds. When you click on a fund, another window opens up where the returns etc are displayed,then, when you click on Performance/unit Prices, the figures are different over the 1yr, 3yr etc returns.

    Man, I hope this makes sense :confused:
     
  20. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You need to check when the performance figures are calculated until.

    For example, one of the fund profiles I'm looking at on the CFS website is dated 30th Sept 2006 ... so it's a bit out of date now.

    That may explain why you're seeing different figures ?