International Global Shares / Funds for Income

L3ha7 · 14th Aug, 2016

Hodor said: ↑

It is my opinion that unless you have lots of time, experience a willingness to do so and other key characteristics then you should be looking at avoiding individual shares. Making ETFs and LICs key holdings and avoiding those with high fees further reduces a number of risks.

For international exposure my opinion is VGS is the best (risk vs reward for average punter) bet over 20 years, low fees, eliminate key person risk which an actively managed fund has to some extent and will have to be monitored over 20 years. I favour VGS over VEU and VTS as it automatically balances and is domiciled in Australia so even less to think about.

Franking has nothing to do with dividend reinvestment plans and vice versa. They are two separate things that have zero impact on each other.

It is my opinion that there are all kinds of things wrong with the above statement and that it shows you should learn a lot more before looking at individual stocks.

Guidance is too near advice for my liking. Anyway, re read the Boglehead, LIC and ETF threads, there are numerous approaches to investing throughout those threads which the pros and cons of are discussed at length.

The more I learn the more distant my idea of managing a portfolio of individual shares becomes.
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Thanks @Hodor

Nodrog · 16th Aug, 2016

Should I invest in the fund or the fund manager?

Which is the best fund manager for share market investors?

By Christopher Georges - December 7, 2015

Should I invest in the fund or the fund manager?

I asked myself this question as I was considering whether or not I should use the services of one of the listed fund managers to achieve a specific overseas exposure.

I decided to investigate further and what I found was quite interesting!

It turns out some of the best performing stocks over the past five years have actually been Aussie fund managers. Clearly, they have been doing something right!

In order to get a better overview, I looked at the five largest pure-play fund managers on the market and compared their sharemarket returns to their flagship fund returns as well as to their best-performing fund.

But first, it is important to understand how a fund manager makes money. There are two main ways – the first is through management fees. This is typically between 1%-2% per year of the funds under management. The manager will receive this fee no matter what the performance of the underlying fund is. Clearly, the more funds under management, the higher the management fee income will be.

The second way is through performance fees. All funds are measured against a particular benchmark and fund managers will receive a performance fee of anywhere between 15%-25% of any outperformance compared to that benchmark. Clearly, a strong performing fund manager will make substantially more money through performance fees compared to a poor performing manager.

After looking at each manager here is a summary of what I found:

1. Magellan Financial Group Ltd (ASX: MFG) has been the best performing fund manager and has returned more than 77% each year on average over the last five years. Magellan’s flagship Global Fund (which has also been its best performing fund), in comparison, has returned 21.1% per year over the last five years. While Magellan stock has far outperformed any of its actual funds, the strong performance of the Global Fund over a long period has been the driver for strong fund inflows that has allowed Magellan to prosper. It now has around $40 billion in funds under management (FUM).

2. Platinum Asset Management Limited (ASX: PTM) has returned on average 17% each year over the last five years which is significantly better than its flagship International Fund which has delivered returns of 12.3% per annum in the same time. Platinum performed relatively well during the GFC and has built a strong reputation for international investing with $28 billion in FUM.

3. Henderson Group plc (ASX: HGG) is a UK-based fund manager listed on the ASX and has returned on average 30.7% each year over the last five years. While the group does not have a particular standout fund, its best performing fund available to Australian investors over the last five years has returned just 6.9% per year. As Henderson reports its earnings in British Pounds, Australian equity investors have benefited from the weakening of the Australian dollar against the pound. The group now has GBP 81.5 billion in FUM.

4. BT Investment Management Ltd (ASX: BTT) has delivered returns of nearly 41% over each of the last five years on average. This compares favourably against the BT Australian Share Fund which has delivered 7.2% each year during that time. BT’s main international fund in comparison has delivered returns of 15.7%. Clearly, investing in the shares would have delivered far superior returns to investing in any of BT’s retail funds. The company has $78.4 billion in FUM.

5. Perpetual Limited (ASX: PPT) was the final manager I looked at and has delivered shareholder returns of 13% each year on average over the last five years. During the same period its flagship Australian Share Fund delivered returns of 6.77% per year. Its Global Share Fund performed considerably better delivering returns of 13.5% per year over the last five years. Perpetual has $28.4 billion in FUM.

Foolish takeaway

There is little doubt that investors would have been far better off investing in the fund manager rather than the fund itself in nearly every situation. That doesn’t mean you should never get a professional manager to invest your money, it just means that you can benefit from their success as well.

Which is the best fund manager for share market investors?
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Nodrog · 17th Aug, 2016

A wee bit dated (4 Feb 2016) but good info on International fund mgrs:

MACQUARIE RESEARCH - Australia Fund managers review & rank

http://www.macquarie.com.au/dafiles...wsletter/docs/2016-02/FundManagers040216e.pdf

chylld · 17th Aug, 2016

Hodor said: ↑

Franking has nothing to do with dividend reinvestment plans and vice versa. They are two separate things that have zero impact on each other.
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@Newfast, to clarify Hodor's comment above, a fund's distributions always contain a taxable component, whether the distributions are paid out or automatically reinvested. Across my funds portfolio (10 direct managed funds, no ETFs/LICs yet) that component represents about 64% of the distribution amount.

I wasn't aware of this until the topic was brought up in another thread here. I had my funds set to DRP as I thought that would save me tax

Some great recommendations here though, will bookmark for my next round of investments. Currently sitting at 11.65%/yr return after fees and taxes.

Redwing · 18th Aug, 2016

Which is the best fund manager for share market investors?

Thought funds or fund manager years ago re: Macquarie Bank and their capital guaranteed funds Peter Spann etc were flogging.

Nodrog · 18th Aug, 2016

Redwing said: ↑

Which is the best fund manager for share market investors?

Thought funds or fund manager years ago re: Macquarie Bank and their capital guaranteed funds Peter Spann etc were flogging.
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?

Not quite sure what you're getting at to be honest. Maybe the home brew from last night has affected my comprehensive abilities.

As for MQG (the company) we've held it for many years and will happily continue to do so. Other than their cash management account which we use as a liquid HUB for the SMSF we've never owned a Macquarie "product". Again a case of owning the mgr not the product.

Redwing · 18th Aug, 2016

austing said: ↑

?

Not quite sure what you're getting at to be honest. Maybe the home brew from last night has affected my comprehensive abilities.

As for MQG (the company) we've held it for many years and will happily continue to do so. Other than their cash management account which we use as a liquid HUB for the SMSF we've never owned a Macquarie "product". Again a case of owning the mgr not the product.
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Probably me

I agree in owning Macquarie rather than their products, they are the Millionaire Factory, but I think its more partners/employees than clients that get the moniker

chylld · 18th Aug, 2016

I bought units in Macquarie's Arrowstreet Global Equity fund (MAQ0464AU) a few months ago. The fund itself has been so-so (1% net growth in that time) but the frustrating thing has been dealing with their "Client Service" team - different associate each time, and half of the forms I email in get mysteriously lost (despite receiving automatic receipt confirmations.)

Frustrations aside, it has stupidly been my best performing international fund to date, as I jumped into the Magellan and Colonial PM Capital Global funds at a sub-optimal time.

trinity168 · 28th Dec, 2016

Peter Hall in shock resignation from Hunter Hall role

what's brewing in hunter hall?

MTR · 28th Dec, 2016

No expert on this stuff .... but it would make sense to be buying US stocks/shares as the economy is on the rise and the greenback is very strong and Trump is also driving many initiatives that should see the economy go from strength to strength.

MTR

BingoMaster · 28th Dec, 2016

MTR said: ↑

No expert on this stuff .... but it would make sense to be buying US stocks/shares as the economy is on the rise and the greenback is very strong and Trump is also driving many initiatives that should see the economy go from strength to strength.

MTR
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The stockmarket is "forward looking" though, and whos to say all of that hasn't been priced in already.

Also, a rising US dollar isn't necessarily good for US stocks. It's usually the other way round

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International Global Shares / Funds for Income

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