Managed Funds Where To Now?

Hi Guys,

New to the forum, and new to share or managed fund investing and looking for some guidance.

I've spent the the last 20 years investing in property. I've done ok out of it because I rode the property boom. But unfortunately, due to divorce I'm forced to sell. Now, this isn't necessarily a bad thing because it's forcing me to take a different direction with my investing. I can't see residential property continue to rise 10%p.a. So perhaps I should try something different?.

Given that I know nothing about global economics I think it would be unwise to act like a day trader. So I think the best option is to buy into managed funds run by people who are experts at trading. I plan to spread my money across multiple funds. My main interest is still property as the online funds seem to return a consistent 10% over a 10 year period.

There is on other fund I'm interested in. Regal Australian Small Companies Fund RGL0004AU. It's only been running 3 years and has great returns.Obviously it could be a volatile fund. Anything that can make 49% can lose 49%. It's my uneducated opinion that we're heading into a recession as no one can afford to spend any money because they're all struggling to pay down their debts. Does that mean that it's a bad time to invest into volatile funds?.

I'm thinking of investing 70% into property spread across 5 different funds and the remaining 30% in higher return funds. Is this a good strategy?. Maybe even Margin loans on the property funds.

Peter

 

Well done sticking with it. Direct residential? Industrial? or Listed property? Other?

It is common to think that it is the best option, the facts indicate it probably isn't. The "experts" aren't the hot shots the marketing tells you they are.

Why this specific fund? What do you like about it?

It appears they have leveraged positions which will increase volatility.

"Australian Equities 131%"

Fees are high; fees have been shown to be the best indicator of long term performance.
The impact of investment costs | Vanguard
The More You Pay, The Less You Are Likely TO Get - New Research By BETTER FINANCE On The Correlation Between Costs And Performance Of EU Retail Equity Funds Without A Doubt Establishes A Negative Correlation Between Returns And Fees
Fund Fees Predict Future Success or Failure

3 years is a very short time frame for performance. Anyone with leverage is likely to show out performance during a strong bull market (such as recently).

Australian small caps are one area where active managers have done OK however so maybe you are in with a chance.

I am not familiar with the manager enough to comment Regal.

It might be your terminology causing me confusion. If you take your proceeds from selling property, buy funds and then leverage via a margin loan things can go wrong very quickly in even moderate bear markets. Margin calls can wipe you out completely.

Listed property was a wild ride during the GFC and is very different to direct residential IMO.

What are your goals and time frames? That might dictate what you do.

I would read up on passive index investing in cap weighted funds.

 

10% pa in the current climate i would call 'high risk ' ( not impossible but plenty of room for unpleasant outcomes )

i would look for 4% with a high probability of it maintaining that for at least 3 years ( and even then that implies your investment is 5 times riskier then a term deposit , .. not that the term deposit is 100% safe either )

read the CIE ( a LIC ) released on the ASX today it is a mild risk-taker , but can see various challenges ahead for investors and the sharre market in general

personally i am very much against borrowing to reinvest ( in anything ) other members have different views but many are industry veterans , with plenty of experience and knowledge ,

i am a relative newcomer only a few years of interest in investing

borrow to buy property , why not you have been in property for many years , and should be able to suss out any new traps ( in ownership and finance ) , but shares/funds and similar they can plummet literally overnight , research stock market crashes for some sort of idea

the current markets are mostly near recorbs highs so a big fall to below the average is most likely due ( some say less than 2 years ).

one thing most have ignored is the chances in a major event , is easy access to your cash ( during the worst of your crisis ) history has some rare moments of cash withdrawals being frozen or heavily restricted ( even in Australia ) but they DO happen .

yes investing looks hard because it is hard to do sensibly in the current very unusual climate , several major factors are in 'uncharted territory ' despite no major crisis yet ( what will happen if things get really desperate )

 

You might find this interesting. Especially if you are considering REITs for your 70%

Active vs passive: Which one works better?

 

so far i think i have all the REITs i can find value in ( but i have been cherry-picking this sector since 2011 ) , i am still watching some smaller LICs that include direct property investment in their portfolios ( and yes someone will likely chime in about the risk of ;illiquid assets ' in a LIC , and rightfully so )

i like to diversify among style ( passive and high beta ETFs , conservtive and opportunist LICs , direct shares and REITs ) hoping someone will be one a winning streak when others are struggling .

what i have been doing recently ( since 2016 ) is veering away from interest-bearing equities , substituting REITs for a semi-reliable income stream

( i prefer income to capital gains ,)

i see volatile times ahead , and that will make some fund managers but break others ( but which ones ? )