ETF Exchange Traded Funds (ETFs) 2019

Exchange Traded Funds (ETFs) 2017 [ETF]

Lars Kroijer’s investing video series. How to invest if you can’t beat the markets, which you probably can’t.



Investing Demystified: How to Invest Without Speculation and Sleepless Nights
by
Lars Kroijer

 

A Change of Heart

Lars Kroijer got rich charging investors fat fees as a manager of his hedge fund, Holte Capital.

Now Mr. Kroijer, 38 years old and the author of a book, “Money Mavericks, Confessions of a Hedge Fund Manager,” has had something of an epiphany about the fees that these lightly regulated investment pools charge.

He now thinks that the fees are too high in many cases and that investors would be better off putting their money in a Vanguard index mutual fund.

Hedge funds typically charge an annual management fee of 2 percent and a performance fee of 20 percent, meaning investors keep 80 percent of the gain. Fund managers justify the fee structure by saying that they do well only when you do. Mr. Kroijer, who started his fund with $3.5 million and increased its assets to about $300 million, charged a management fee of 1.25 percent and a performance fee of 20 percent.

Speaking in London last week to lawyers and prospective hedge fund managers, Mr. Kroijer said he had his awakening in early 2006 while at the wedding of a friend outside Chicago.

As he tells it, he was talking to the bride’s aunt who asked what he did for a living. When he responded that he worked at a hedge fund, she, sounding somewhat offended, replied: “I know what a hedge fund is.”

It turned out her husband, who was a couple of years away from retiring from his job at a supplier to a Detroit automaker, was investing in hedge funds through his pension plan. Hedge funds, the woman told Mr. Kroijer, were like a “a guarantee against markets going down.” She didn’t know which hedge funds her husband’s pension money was invested in, but she said the plan used a fund of funds to pick the investments.

That got Mr. Kroijer thinking about how many mouths there are to feed before an investor in a hedge fund actually sees a return.

 

You beat me to it Redwing. I found Mr Kroijer's website yesterday, I highly recommend his videos.

 

I just put in a request for the book for Xmas, looking forward to reading it

 

If you guys want to hear an interview with Lars Kroijer, look for the Meaningful Money Podcast (UK based but the host Pete Mathew is surprisingly easy to listen to) where he talks about the above. Quite a good interview and the book is on my list of Christmas presents as well

 

A golden era for active managers is coming

The fund managers favourite story

 

What a load of rubbish. I was invested in a pengana managed fund and sold out of it a few months ago. Over the last 3 years it underperformed the index and that’s not the worse part. They charge ridiculous performance fees benchmarked against wait for it. The rba cash rate. Seriously these clowns charge you a performance fee above there normal management fee if they manage to out perform the almost nothing rba cash rate. So as long as they don’t achieve a negative return they pat themselves on the back and take a chunk of your money.

Golden era my A**

 

Yeh they are a disgrace.

Absolutely no shame.

The sheer arrogance in what they were writing was what stood out to me the most, but i had previously noted their exorbitant fees.

Pretty sure there is evidence active doesnt perform any better in a bear market. But that shows how bad its gotten... "we need a market collapse to prove our worth."

Atleast Magellan and platinum are subject to a high water mark.

 

I listened to this yesterday, it was a good interview, Lars speaks very well and I agree with you @Isla_Nublar , its a good easy "listen".

 

Further to this post, I got around to reading a bit more of the interview Barefoot had with Vanguard. A few interesting points:
1. As mentioned, they will be reducing the fees for their retail funds
2. (I think I've read this somewhere on the forum before), they will be setting up their own Super fund
3. They will be releasing a new "investor platform" for their customers, so Vanguard will become a share broker....able to buy and sell individual shares through them, not just ETFs etc.

Targetted release date 1st quarter next year.

 

Super keen to see all this happening. If Retail Fund fees reduce significantly, I know my daughters will dump their Stockspot portfolios without hesitation and defect across.

 

@oddshapes do you have a link?

 

This is a second attempt at this by Vanguard in offering a Super option. They gave up the first time palming it off to MLC. However the environment is much more favourable now with indexing having become more popular.

It will also be interesting to see how they deal with Super “pension” Payout? They currently have a “Managed Payout Fund” (non Super of course) which pays monthly cash distributions. It’s been a bit of a flop though attracting only $28 Mil since it’s inception in 2015. Vanguard have looked at getting rid of it a few times but continue to give it the benefit of the doubt.

https://api.vanguard.com/rs/gre/gls/1.3.0/documents/11668/au

 

It's on his website but in the members' section.

 

Interesting, I didn't know they'd been down this path before. It must be a huge undertaking with all the compliance issues and I'd imagine a large staff intake. If it gets up, I'd definitely be having a look at it.

 

Hi Big A, do you still remember which fund from Pengana that charged performance fee above the RBA rate? If so, what was the initial reason for you to invest in that kind of fund? I'm curious as I consider you'd be quite sophisticated or perhaps, it was just a mistake.

 

Hey @lamecrocs , so the fund was the penagana australian equities fund.
Before I go into the why, I just jumped on there website and noticed that they have changed the performance fee. It is now RBA cash rate plus 6% p.a. Before they slug you a 10.25 performance fee above there 1.03% management fee.

So 4 years ago now I had never invested in anything other than resi property. The advisor I signed up with recommended a bunch of different managed funds with Pengana being one of them. Showed me all these stats about how they have managed to outperform the market and offer some downside protection.

At the time I hadn’t been through the PC school of investment and was oblivious to other options. I had never heard of low fee index funds. And the advisor didn’t think it was important to mention them to me as an option. Hence why he is no longer my advisor.
I obviously put to much faith in the advisor at the time and didn’t understand the market or my options.

Then this time last year I found PC. I have learnt more here then any other single other source.

 

thanks @Big A again for sharing your investment journey and lessons. I do learn a lot from the very open and experienced investors in this forum (be it property or shares).

 

BetaShares Diversified ETFs: low-cost, all-in-one investment solutions

• DHHF: BetaShares Diversified High Growth ETF (90% growth, 10% defensive)
• DGGF: BetaShares Diversified Growth ETF (70% growth, 30% defensive)
• DBBF: BetaShares Diversified Balanced ETF (50% growth, 50% defensive)
• DZZF: BetaShares Diversified Conservative Income ETF (25% growth, 75% defensive)

Management fees of 0.26%
No word on asset allocation yet.

 

No 100% equity option, that's a shame.

The Australian allocation will probably be high (40% like Vanguard?) anyway so I won't invest.

MER of 0.20% would've been a strong move.