Issue 48: March 2009
There are many of us who choose not to attempt to figure out which share to buy and which to sell: we prefer to leave that to the experts and spend our time figuring out which experts are best!
We also have to wade our way through the vast array of managed products: managed funds such as Perpetual Industrial Share Fund (one of the oldest); ASX listed managed investments with the half-dozen different categories of Australian equity products; index funds.
We don’t believe in re-inventing the wheel so we’ve trawled through the web-sites that are relevant and present a fairly comprehensive coverage of the information about managed funds products that comprise Australian equities.
So set aside a couple of days to investigate what‘s available. We hope you find the trip worthwhile.
This is the starting point of looking at Australian equities funds. The MI Project updated the 2007 report with Morningstar data to the end of June 2008. While that’s quite a while ago: (i) not all that much has happened since then, and (ii) we selected funds on the basis of 5-year performances.
To examine the two-page fact sheets for the top 12 Australian large-cap funds, click on:
http://www.investors.asn.au/members/managed-funds-project/default.asp (please note you will need to first log on as a member to the AIA website) and then click on FUNDS IN LARGE CAP CATEGORIES on the right hand side.
To examine the two-page fact sheets for the top 9 Australian small-cap funds, click on FUNDS IN SMALL CAP CATEGORIES on the right hand side.
The AIA website contains other information about Australian equity funds viz. in previous versions of this MI Bulletin. While some of the material is time-weary much is in fact timeless. Check them out here:
http://www.investors.asn.au/bulletins/managed-investments/.
Morningstar is a must-view site for investors who use managed funds. If you are new to this site you can register for free to get heaps of information. But the real detail is available to Premium subscribers at a cost.
But don’t let this put you off. Register for the freebies at: http://www.morningstar.com.au/Home.
Another source of free information if you register is InvestSmart at: http://www.investsmart.com.au/. This uses fund data sourced from Fairfax Digital.
Factors to consider include: taxation, style of the fund, blending different styles, size of the fund, how many funds in a portfolio?, which funds lose less when markets fall?. For more information about these matters click on Scott McKenzie’s presentation to the 2007 Gold Coast conference:
http://www.investors.asn.au/downloads/Conf2007/20070722National/McKenzieHartleyMF1.pdf.
This concludes with some suggestions about how to evaluate managed funds.
Ashley Ormond takes a huge swipe at Australian equity funds in his lengthy (but comprehensive) piece at:
http://www.investors.asn.au/downloads/SIGs/MI/2008/MISig0811.asp#bad. This is well worth a second look from one of last year’s MI Bulletins.
One source of managed investments that is not given attention in accord with its worth to investors is the ASX-listed LMIs. These are companies that invest in other companies – their job is investment itself. They are well worth a look. A good overview is available from Michelle Drinkwater’s presentation to the 2006 Gold Coast conference. Michelle is from the ASX.
Click on: http://www.investors.asn.au/downloads/general/ADL061009Morgan.pdf.
Another overview is provided by Scott Francis writing in the November 2008 edition of Investors Voice. Click on: http://www.investors.asn.au/downloads/Voice/2008/11/0811LICsFrancis.pdf.
The ASX website itself contains a wealth of information about all types of LMIs: listed investment companies, A-REITs formerly listed property trusts, pooled development funds, infrastructure funds, exchange traded funds, absolute return funds. Click on: http://www.asx.com.au/products/managed_funds/index.htm.
A-REITs: http://www.asx.com.au/products/pdf/a_reits.pdf
Infrastructure funds: http://www.asx.com.au/products/pdf/infrastructure_funds.pdf
LMIs: http://www.asx.com.au/products/pdf/listed_investment_companies.pdf
ETFs: http://www.asx.com.au/products/pdf/exchange_traded_funds.pdf
Absolute return funds: http://www.asx.com.au/products/pdf/absolute_return_funds.pdf
One specific ETF worth a look is the new SPDR S&P/ASX 200 Index Fund http://www.asx.com.au/products/pdf/spdr_asx200_fund_long_term_investment.pdf.
There is plenty of research available about LMIs accessible from the LMI home page, produced by Kinetic Securities, Aegis, Bell Potter, Shaw, Tolhurst, PIR. Just click on the relevant URL.
Researching individual LMIs is quite simple. Click on: http://www.asx.com.au/products/managed_funds/tools/research.htm. Just look for the LMI category or the individual company.
An excellent introduction to index funds was written by Jamie Nemtsas of Wealthstone Investment Management for the January 2006 edition of the MI Bulletin. Click on: http://www.investors.asn.au/downloads/sigs/mi/misig0601.asp#jamie.
There is plenty of information about index funds at the Vanguard site: www.vanguard.com.au.
If you are not convinced about the value of index funds have a look at the following:
www.vanguard.com/bogle_site/sp20040413.html
www.vanguard.com/bogle_site/sp20050202.htm
www.vanguard.com/bogle_site/sp20011021.html
www.vanguard.com/bogle_site/sp20050524.htm.
These references make convincing cases that:
Of course it is John Bogle, the founder of Vanguard in the US who wrote the papers cited above, and the research is based on US managed funds.
| This bulletin is produced by the: | Australian Investors' Association PO Box 7439 Gold Coast MC QLD 9726 Phone: 1300 555 061 Fax: 07 5538 8376 Email: aia@investors.asn.au Web: www.investors.asn.au |
This Disclaimer is made for the purposes of the Corporations Act 2001 as amended by the Financial Services Reform Act 2001 ("the Acts").
The Australian Investors Association ABN 75 052 411 999 (" AIA") is a non-profit association that aims to assist investors become more knowledgeable and independent. In furthering its aims the AIA offers general information through its publications. The AIA has no Australian Financial Services Licence (“AFSL”) under Part 7 of the Corporations Act 2001 as amended.
The AIA, its officers, agents, representatives, and employees do not hold an AFSL and does not purport to give advice or operate in any way in contravention of the Acts. The AIA, its officers, agents, representatives, and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this publication to the full extent permitted by law
The AIA has a policy that does not permit the endorsement or recommendation of any product or service regulated by the Acts.
This publication has been prepared as an information publication without consideration of any reader's specific investment objectives, personal financial situations or needs. Because of this, no reader should rely upon the information and/or recommendations contained in this publication. Readers should, before acting on any information contained herein, consider the appropriateness of the information, having regard to their objectives, financial situation and needs.
The AIA believes that the material contained in this publication is based on the information from sources that are considered reliable and is accurate when issued. However, the AIA does not warrant its accuracy or reliability. All views and information expressed by the AIA, its officers, agents, representatives, and employees are for the purposes of discussion only.
If this publication, or any information, relates to the acquisition, or possible acquisition, of a particular financial product, the reader should obtain a product disclosure statement relating to the product and consider that statement, and should consult a licenced person before making any decision about whether to acquire the product.
The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the AIA.
COPYRIGHT: All rights reserved. No re-publication or copying in any way, including electronic means, may be made without the prior written consent of the AIA.
© Copyright 2008 AIA | Website design by XCEL Internet Solutions