ETF Exchange Traded Funds (ETFs) 2015

Discussion in 'Shares & Funds' started by The Falcon, 21st Jun, 2015.

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  1. Jack Chen

    Jack Chen Well-Known Member

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    Do you think QVE is worthwhile for someone that already holds the major LICs (AFI, ARG, AUI, BKI, MLT) in addition to VAS?

    I am concerned that adding QVE will mean my portfolio will be less passive and I'll need to keep a constant eye to see if their investment methodology or investment team changes.
     
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  2. The Falcon

    The Falcon Well-Known Member

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    For sure. The LICs you mention dont vary hugely from the index (with the exception of BKI). I think you need to be comfortable with the manager. How well do you know Tom Millner and Will Culbert, or Frank Gooch? Any active investment is subject to manager risk.

    IML (QVE Manager) investment style as a value investors has stood the test of time for 17 years or so. While management may change (unlikely while Anton Tagliaferro remains as manager and largest shareholder!) the methodology will remain as this is what people invest with IML for.

    All of the above I think are sound managers, and I would also add Chris Mackay at Magellan Flagship Fund, and Hamish Douglas at Magellan Financial Group as being guys I would happily pay for.
     
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  3. Nodrog

    Nodrog Well-Known Member

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    Cat,

    As TF stated the LICs you hold are somewhat similar to the index and all share the same issue in that they are dominated by the banks, a couple of miners and a telco! We also have substantial holdings in a number of the older LICs. Tend to invest in the likes of VAS when the market is on the nose but the LICs not so ie are trading at a premium.

    QVE invests outside the top 20 providing dramatically better diversification than the ASX 200/300 index. And they are a conservative manager with a long term proven track record. Some get concerned with key person risk but needn't as IML are very process driven from what I understand. Hence if Anton T retired I would still be happy to hold.

    The following links may be helpful:
    http://qvequities.com/files/Fact Sheet/150710-QVE-Fact-Sheet.pdf
    http://www.iml.com.au/IML/main/index.php
     
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  4. jaybean

    jaybean Well-Known Member

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    I just bought my first ETF! My plan as laid out about 20 posts back is to go 80% VGS and 20% VGE. I'll probably put some money in every fortnight.
     
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  5. BingoMaster

    BingoMaster Well-Known Member

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    Bennelong seems to be going for something very similar with their new fund - passive top 20, active ex 20:

    Andrew Aitken introduces the Bennelong Twenty20 Australian Equities Fund // Bennelong Funds Management

    I guess it makes sense, as the majority of research pertains to the top companies and that's where the market is most efficient. Then you have a quality manager in the small cap space.

    But as you say you could do the same thing with QVE and VAS, and I prefer IML over Bennelong.

    You could even substitute VLC (vanguard's top 30 ETF) for VAS and pretty much reconstruct the new fund Bennelong is launching.
     
  6. The Falcon

    The Falcon Well-Known Member

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    Cheers wasn't aware of this, yes indeed it is the same concept. I'd take IML and Vanguard over Bennelong, particularly given listed vs. unlisted, but it is interesting to see a fund manager with the same concept :)
     
  7. Nodrog

    Nodrog Well-Known Member

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    Bennelong are also in the process of listing a new Absolute Return LIC using a similar strategy to the unlisted version which has shown significant outperformance. Main concern for me is key person risk and generally the desire for boring things with low fees.

    https://www.morgans.com.au/morgans-assets/PDFs/absolute-prospectus.pdf

    "Since its inception in 2002, the Bennelong Long Short Equity Fund strategy has returned investors 10 times their money, compared to about two times for the broader sharemarket - 18.5 per cent pa return.

    .."investing is simple and one way of simplifying it is to take out the risk you can't control;" the fund does this by trading pairs of stocks – betting on one and betting against another (this is also known as shorting) so returns are generated by how the stocks perform relative to one another.

    "Mean reversion is your enemy. We want dispersion. All we are interested is the relative value between two securities that we think are homogenous."

    The fund limits itself only to 30 to 35 pairs, or 60 to 70 positions, and only in ASX 100 stocks. Some believe it's a small pond but the "limited universe" is its edge; they know every stock backwards, quite literally. "We know the companies, we know the drivers. We have the degree of familiarity."

    The LIC route is not so much about "permanent capital" but rather a means of diversifying the base of investors in the fund. There's a clear shift away from wholesale investors towards retail because of competition and pressure over fees. The LIC charges a 1.5 per cent management fee and a 20 per cent performance fee on anything above zero, consistent with the wholesale fund terms."
     
  8. BingoMaster

    BingoMaster Well-Known Member

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    Thanks austing, wasn't aware of that one!

    It sounds great IMO. Of course, probably for a smaller allocation and mainly for diversification purposes (they mentioned the lack of correlation between their strategy and other asset classes). On the surface of it, it seems very similar to Watermark's fund WMK - same fee structure, and their unlisted Market Neutral fund has provided similar returns since inception (around 17% i believe). WMK isn't very liquid however, and is still trading at a discount to NTA
     
  9. S1mon

    S1mon Well-Known Member

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