Managed Funds Fees and Performance

crazyboy on 14/06/2023 - 23:15

I am looking for options to invest some money in managed funds.
I have been investing every month certain amount of money in the colonial first state managed investment funds from the last 3-4 years, but I haven't seen much growth. I prefer to choose high risk managed funds only for the maximum growth. I did my own research and have chosen funds which have performed extremely well in the last 5-10 years. Some of them are global shares and some Australian shares. Some of the funds where I invest are: -

Baillie Gifford Long Term Global Growth - Management Fees 1.06% Buy Sell Spread 0.05%
First Sentier Wholesale Concentrated Wholesale Share - Management Fees 0.96% Buy Sell Spread 0.10%

I would like to ask if the management fees I am paying is too high or is it normal for managed funds.

I have another concern, is there any way in Colonial First State, I can see the average price I bought the units for as I purchased units over the past 3 years every month? I would like to see if I am currently in profit or loss.

I can see individual funds performance over the past 3,6,12 months, and 5,10 years but I would also want to see my profit or loss position for what I have purchased through the years?

Are there any other funds where I can invest and my concern is I should be able to see my average purchase price and how much in profit/loss I am at the current stage?

Financial

Comments

  • dcep on 14/06/2023 - 23:51
    +6

    … something something about decades of historic data shows active managed funds always failed to outperform passive index funds

    • netjock on 15/06/2023 - 12:41
      +1

      For most people this is the truth.

      Only sectors like small caps where the markets are not efficient you might get lucky.

      Sometimes it is also timing. It is like ARK fund outperforming the S&P500 then under performing. Unless you want to time the market better to buy the index.

  • p1 ama on 14/06/2023 - 23:52
    +3

    You shouldn't be investing in managed funds vs. unmanaged unless you're after something very specific.

    If you're just a general investor looking for exposure to diversified equities, then you should really be investing in an ETF, the fees will be a fraction of what's charged by a managed fund.

    You should only be investing in a managed fund if you want: (i) exposure to non-traditional assets, e.g. real estate, infrastructure, private equity, emerging markets…etc., (ii) you have a specific risk-return profile which an unmanaged fund won't be able to give you. There are other reasons, but not at the retail volumes that you are investing at currently.

    • Stopback on 15/06/2023 - 00:09
      -2

      EFTs are a bubble

    • soan papdi on 15/06/2023 - 09:15

      ETF is just a share/stock version of a fund, index fund or not. Fees in funds are usually comparable or lower, based on my personal experience with Vanguard. But it does look like 1.06% is a lot in terms of fees.

      @crazyboy, have you compared your fund's performance over 10 years compared to asx 200 or s&p 500?

  • Seraphin7 on 15/06/2023 - 11:17
    +2

    To get your specific performance, etc., Colonial provide you with online access to your account that list all transactions at the various unit prices, etc. Have you logged on to the Colonial portal for this?

    Regarding the Baillie Gifford fund, it has returned 7.21% p.a. over the three years to March 2023 according to the information on the Colonial website. This is vs. its benchmark that has returned 11.95% p.a over the same period (MSCI All Country World Net Index). Obviously quite a level of underperformance, but you have seen reasonable positive growth in absolute terms over that time.

    Regarding the First Sentier fund (and I assume you mean the First Sentier Wholesale Concentrated Australian Share fund), it has returned 13.87% p.a. over the three years to March 2023 according to the information on the Colonial website. This is vs. its benchmark that has returned 16.41% p.a over the same period ( S&P/ASX 300 Accumulation Index). Again, there is quite a level of underperformance there, but also you have seen good positive growth in absolute terms over that time.

    There are of course individual options with the same benchmarks that have performed better over that time frame, such as the Platinum Wholesale International fund (10.49% p.a.) and the Colonial First State Wholesale Index Australian Share (15.91% p.a.) respectively. Whether these funds continue to provide superior performance to the examples you have cited into the future is of course speculative and you will need to conduct your own research and seek your own advice. Of course fees come into the discussion, but you should be looking at performance before looking at fees.

    The above comments are provided for educational and illustrative purposes only and do not constitute advice. You should seek your own advice before investing.

    • netjock on 15/06/2023 - 12:48
      +2

      Good illustration +1

      Problem with managed funds is they also hold back cash for redemption which makes a cash drag. Alternatives are listed investment companies which are permanent capital. People just sell their shares. Sometimes they are selling for like 95c for $1 of assets but that is a whole different discussion.

      Point to point measure of performance also doesn't take into account sometimes these funds were massively out performing up to 2021 until rates start rising. Growth stocks are very rate sensitive.

      Just look at Cathie Wood's ARK innovation listed fund.

    • crazyboy on 16/06/2023 - 11:20

      Regarding Baillie Gifford fund, since inception, it has given 13.71% vs benchmark 9.58%.
      First Sentier Wholesale Concentrated Australian Share fund, in last 5 years, it has given 9.05% vs benchmark 8.63%.

      Yes the portal provides a list of everything, but there is something called overview. How much in total was invested and what's the current value. I can only see current value.

      I called and asked them and they said you cannot see average unit purchase price, which is weird, you have to calculate manually for each month from when you started investing. Another thing they mentioned is how much you have invested, you have to check statements, the portal does not show. Quite disappointed with their service and website and the way they hide things.

      • mrtin on 16/06/2023 - 22:28

        Are you investing into these funds via a platform?

  • ihbh on 15/06/2023 - 11:34

    CFS outperformed in Greg Perry's days. That's long past; also owned by CBA.

  • Daniel Plainview on 15/06/2023 - 13:23

    @crazyboy

    A few questions:

    1) You say you prefer high risk funds for maximum growth and yet are looking to change out after 3-4yrs of poor performance. Given you're going into such 'high risk' funds, do you not feel changing out in such a short period is counterintuitive? i.e I am certain such funds would state clearly they're for 7-10yr investment as they will be highly cyclical. To me this implies your risk profile is not as high risk as you believe.

    2) Why managed funds rather than ETFs?

    3) You state: > I did my own research and have chosen funds which have performed extremely well in the last 5-10 years.

    Do you feel theres a real risk that you're chasing 'past performance' which is likely to not be repeated?

    4) I have not looked at your fund choice but as others have pointed out statistically around 80% of all active fund managers will underperform the index's they're benchmarked against. So consider this more of a 'statement' than a question.

    5) You stated the rather healthy fees of the two funds you have shortlisted, I suspect they might also have 'outperformance' bonuses on top of those? This will take them to well over 1% MER - this being the one element an investor can control i.e the fees paid - do you not feel a diversified approach even like a DHHF, which is ~0.30%MER (0.19% + estimations of the tax drag on returns) might not be a safer choice while still being quite aggressive?

    6) Again a statement but whopping fees and also crappy spreads/slippage on those two funds, IMHO.

    7) Do you not feel that the lack of transparency with regards you being in profit or loss is something of a concern?

    8) Are you aware of the tax disadvantages of managed funds vs direct investments i.e ETFs: https://passiveinvestingaustralia.com/the-problem-with-poole…

    • crazyboy on 16/06/2023 - 11:34

      1. I am not planning to sell. I will stop future investments and will hold for another 4-5 years and whenever I see a peak in market, I will sell all of them.

      2. No idea. Can you suggest low cost ETF platform please and some ETF to look at?

      3. I research the shares inside each of the managed funds, they were all extremely good. So I hope the performance is repeated in the future. But no one can predict future.

      4. The funds I checked were over the benchmarks if I see last 5 or last 10 years. Hence the reason I chose them.

      5. Yes they take some performace fees. I believe it was included in the figures I quoted. Yes planning to invest in ETF in future.

      6. Yes agree. Waiting for them to increase and will sell.

      7. Yes its a bit of lack as well as not having proper website. I invest in other platforms and they have a lot more clarity.

      8. I know every year managed funds send me distributions which increases my taxable income. I usually prefer to defer my capital gains when I sell. So I think ETF should be a good option for me in the future.

      • Daniel Plainview on 16/06/2023 - 13:53

        Gee I must be old and crabby - but whatever happened to folks saying 'thanks for the reply' when you're tryign to assist their problems. Not meant solely for the OP but happens all over these days, you'd think we're a paid help service.

        RE: 1. My mistake. Not sure what you're holding, but no point holding if you feel they suck or find better options, holding more different assets than needed likely just complicates things for you but obviously some diversification is good.

        RE: 2. ETF platform? A broker? Well I strongly endorse Stake, but for real time pricing etc perhaps CMC. Which ETFs? I really can't recommend as I do not know enough about what you want etc. Suffice to say its a well beaten path if you chose to look into or give more info on your needs/preferences.

        RE 3. You researched each of the shares within each of the managed funds? Really? As I'd expect each of them would hold hundreds of individual holdings and this would regularly change both the holdings and weights, perhaps you've miscommunicated. Your money, not mine - so if you are certain that these aren't in the 80% of active fund manager that underperform their indexes each year, ok….but those are 1 in 5 chances.

        RE 4. Funds can pick a benchmark to SUIT their needs, so that they beat their benchmark doesn't mean much in and of itself. How did they compare against comparable low cost market benchmarks e.g ASX200 for Australia and S&P500 for the USA?

        RE 5. Fair enough - as long as you're aware of the costs, which are quite high.

        RE 7. Well I mean if you can't get basic transparency that'd seem problematic to me - but you seem determined to press on with them - not sure what the case for them above any number of other options is as I've literally read craploads in this area and never heard these mentioned or recommended by anyone ever. So perhaps they're a big secret….? :-/

        RE 8. Yes, exactly but you're asking about managed funds, so go figure. Anyway best of luck but I would read up more if I were you as I think you're chasing past performance and playing a low odds game with the active managed funds that will hammer you with fees and taxes IF they work out.

  • Hearthstone on 15/06/2023 - 22:43

    if you are an average investor who wants hand off put your money into a broad-based index ETFs
    if you want to seriously grow your capital and wealth, forget fund manager you need to learn the art of picking your own stocks.

    ETFs is good and steady but it has no chance of delivered you any massive windfall, only picking stocks can do that.

    that the crud of it but picking your own stock required a fair bit of work and know-how of evaluating certain business and ability to decipher
    financial reports.

    if you are serious, start with this book, it gives you a good idea of how to go about it, but picking stocks is a never-ending learning journey you probably
    have to end up learning and reading dozen and hundreds of books. I lost count of how many literatures and books I read maybe in the hundreds in the last 20 years

    https://www.amazon.com.au/100-Baggers-Stocks-100-1/dp/162129…

    good luck

    • crazyboy on 16/06/2023 - 11:34

      Could you please recommend good ETF and ETF platforms?

      • Hearthstone on 16/06/2023 - 12:15

        There is no ETFs platform, ETFs are trades like shares and you buy them via a broker like Stake, Comsec, IB etc…
        if you got an account, free to sign up you can look up by type in three or four letter codes

        A200 - for ASX 200 index (Broad based Australian market covered top 200 companies, its composition is slightly differed from other, it based on Solactive)
        but it makes bugger all differences in performance but the differences where it counts is it has cheapest MER and it FUM is growing fast each year due to cheap fees.

        IVV - for US top 500 companies again one of the cheapest MER

        https://www.marketindex.com.au/asx-etfs

        if you want to see what is available and their cost

        there are thousands of them out there a lot of them are thematic or covered specific asset but again long term none of them can beats
        broad based index, so broad based index is the way to go.

        most of my money is on actively picking stocks with the winning I throw in broad-based index for safe keeping and to give me passive income (I only add from the winnings and has never sold any of my ETFs unit)

        If you are after a cheap broker sign up to Stake, then sign up to comsec for research but use Stake to executes your trade

      • Daniel Plainview on 16/06/2023 - 13:55

        @crazyboy
        Respectfully if you're asking these questions - it reinforces my earlier point that you really need to do a lot more research into the whole investment option area before you put more money into things.

        Nothing wrong with getting all the info first and then acting - but if you don't know a 'good ETF platform' which to me shows you are unaware of what ETFs even are - means you're not across all the things in this area you should be. :-)

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