info re Index Funds wanted

lancer24 · 17-08-2008, 01:06 PM

Thanks Sim,

Your examples explained the fee structure very clearly.

I understand the importance of lower MER for the long run now.

I will probably go in for a mixture of Index funds and 1 or 2 ETFs after researching a bit more.

lancer24 · 17-08-2008, 01:22 PM

CRC you are right re the Australian Prop securities being a subset of the overall ASX index. I will invest in global properties something along the lines of colliers.

Quote:

Originally Posted by crc_error

I think your spending a little to much time on analyzing the fees.

yeah well, i work as an analyst, details and numbers work for me

Besides the initial 16K, i plan to contribute $1000 each month to DCA. so the fees re the additional contributions will make an impact, specially since I am investing for a 10 year plus time frame. I have got 40 years till retirement, so all these costs will add up over time.

this is actually a learning curve for me. i have read a number of books on financial planning and investing strategies inlcuding a randow walk along wall street.

but i never really understood the maths behind the fee structure and how it impacts in the long run. but thanks to this forum, i am beginning get a a good understanding.

thanks guys for guys for the good work.

crc_error · 17-08-2008, 01:31 PM

Fee's do definatly reduce your performance. Especially over the long term. The other thing when you look at those examples which show how you save $15000 in 30 years time etc, remember $15000 in 30 years time is going to be a very small amount.

If you can get exposure to the asset classes via index fund, then I think they are a very viable option. I think index funds are better than those large titanic fund managers who essentially only follow the index. I elected to choose smaller fund managers owned and managed by the person making the investment decisions, (and has their own money invested with yourse) who have outperformed the market over a 5 year period. But investing into the colonial first state australian share fund, will only follow the index, and you may as well invest into the index with lower fee's.

Jess · 25-08-2008, 04:53 PM

Quote:

Originally Posted by lancer24

Thanks crc,

I hadn't looked at Infrastructure funds before, but will now consider them.

Had been thinking abt australian listed property, but agree that its a very small pool of companies. Global properties would be more stable. hopefully.

I had originally been thinking about splitting my 16K as below and taking out margin loans across the board and gear it to the maximum.

Global Equities Index / ETF: 4 K
Australian Equities Index / ETF: 2 K
Emerging Markets Index / ETF: 4 K
Properties Securities Index : 2 K
Small Cap Index / ETF : 3 K
Cash : 1 K

As I am looking to take margin loans on the above, which makes it risky and aggresive

, decided to hold 1K in cash as well. May look at the infrastructure fund to reduce the volatility.

I havn't really checked if I will actually get a margin loan against my small amounts.

also, are there any value index funds out there? I know that DFA have them, but they are by invitation only. And I can't really be bothered going to a financial planner. don't have the money to spend.

I will probably go with Netwealth. I had looked at InvestSmart as well, but they don't seem to have wrap accounts.

Also, has any one looked at YourShare - managed fund and using them ?
they rebate 100% of entry fees on new investments & contributions and 50 % -70 % of trailing commissions including Netwealth Wrap accounts.
I had a look at their Cash Rebate calculator, they make a strong case speically in the long run.
Is anyone currently using Yourshare ?

Hi

I work for InvestSMART and we offer BT Wrap, Macquarie and a few others, or if there is a particular Wrap account you are interested in we can assist you in going into that Wrap product if you let us know which one you would like to invest in.

Cheers

Jessica

Norak Bastiat · 25-10-2008, 10:29 AM

I'd go with STW since it has low management fees of 0.29 per cent, which beats most traditional managed funds. However, maybe it's cheaper to just buy individual shares in the top 20 Aussie companies and weight how much you buy according to market cap? You won't have to pay management fees, which can be high if you invest a lot, and you will still replicate the index reasonably. Personally I wouldn't buy an index fund for Aussie shares in big companies because these companies' shares are so easy to buy cheaply with, say, Commsec. However I would use ETFs for foreign shares, small companies, etc.

If you save $1000 per month, that is not a problem. Just save it up in a savings account until you have about $4000 and then buy then.

Furthermore, I agree with CRC Error and would caution against investing only in Australian shares. Look at iShares and buy some foreign share ETFs. Why? Because the Australian dollar can collapse (in the last few months the Aussie dollar collapsed by about 40% against the US dollar) and having some foreign shares can give you currency diversification. When one Aussie dollar purchased 98 US cents I bought exposure to foreign companies like those in the US. Now that one Aussie dollar only buys 62 US cents, dividends from those US companies coverted back to Aussie dollars gives me much more.

Quote:

I am not sure of how liquid iShares are though, they being a new product in australia.

I think iShares has market makers who create artificial liquidity.

AsxBroker · 25-10-2008, 01:41 PM

Hi Lancer,

You'll find that the idea of indexing is not to make investment choices about investing in value or growth shares but to own them all, in line with the index it is trying to replicate. Some fund managers may have tilts, eg, high yield, value, growth, etc though it isn't "real" indexing...

Cheers,

Dan

Quote:

Originally Posted by lancer24

...also, are there any value index funds out there? I know that DFA have them, but they are by invitation only. And I can't really be bothered going to a financial planner. don't have the money to spend.

lancer24 · 29-10-2008, 02:53 PM

Quote:

Originally Posted by AsxBroker

Hi Lancer,

You'll find that the idea of indexing is not to make investment choices about investing in value or growth shares but to own them all, in line with the index it is trying to replicate.
Cheers,

Dan

Ok, Dan , I get your point. Will reword, my question. Are there are value style funds out there ? I know only of DFA and Hunter Hall.

lancer24 · 29-10-2008, 02:54 PM

Hi Norak,

I have been thinking along the same lines. I would use ETFs mainly iShares only to buy in Foreign markets. I am looking at IZZ ( China 25 ) and IAA ( Asia 50)

For Aussie shares, I am thinking of buying CBA, Wespac, BHP mainly. And maybe buy into a LIC like Agro.

AsxBroker · 29-10-2008, 05:31 PM

Hi Lancer,

There are heaps!!!

Approximately a third of all the fund managers are Value style (compared to Growth and Core/Neutral).

AXA have a few value funds;
Tyndall is also value
Perpetual is value
Schroder have a global value fund

Van Eyk actually classify fund managers into their investment style which will make it easier to find out

Cheers,

Dan

PS This is general information. Before making an investment decision speak to your FPA registered Financial Planner.