It Is Very Easy To Pick Winners In Hindsight
Aceyducey said:
So Likewow - what comparison is relevant IYHO?
Alan H said:
Not taking anything away from 20-odd% this year though. Any year an investor can receive that they should be happy.
I think Alan has it right
There is
only one reason that I ever mention the index and that is that we charge a performance fee based on the extent that we exceed the index.
THIS IS THE ONLY FEE WE CHARGE
There is no :
Entrance fee
Exit fee
Management fee
Other fund managers charge fees,
irrespective of whether they perform or not.
There are many ways in which to invest one's dollars:
1) Property
Average CG returns are between 9% and 10% for major Australian cities over the past decade. Yes there have been some years of between 16% and 20+%, but these need be taken in conjunction with the less spectacular years.
Comment: If a property investor could achieve 10+% medium to long term on a property portfolio, they would generally be well satisfied.
Advantages:
a) Excellent Leverage
b) Low to Medium Risk
2) Shares:
Average CG returns are between 10% and 12% on the Australian market this past decade. Yes there are funds that have exceeded this average in exceptional years as well as underperformed spectacularly (Some of the geared funds at -60% in 2001) in less favourable years.
Comment: If a share investor could achieve 12+% medium to long term on a share portfolio, they would generally be well satisfied.
Advantages:
a) Good Leverage
b) Medium to high Risk
3) Cash:
Cash rate at about 5+% No CG, just the income and no leverage.
Advantages:
a) Liquidity
b) Very Low Risk
c) Income for serviceability.
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SO WHY THIS OBSESSION WITH BEATING THE INDEX
Wisdom in
HINDSIGHT seems to be the catch cry of the knockers and world authorities . . .
IF you had invested in ABC fund you
WOULD have got X%
IF you had utilised maximum leverage in a bull market you
WOULD have . . .X++%
IT IS VERY EASY TO PICK WINNERS IN HINDSIGHT
Example:
Skandia Geared Australian shares – return 60% last year.
Notice though that this is a new fund. (Started Sept 2003 during an unprecedented Bull run)
Please, before you comment, I am NOT knocking this fund . . . this is an exceptional result!!
The point literally is that any leveraged fund will perform exceptionally in a bull run.
With high levels of leverage, geared funds will generally under-perform just as spectacularly in a bear run.
The
REAL POINT I am trying to make is that it all averages out over time and any result that exceeds the index over time is
NOT to be sneezed at.
I offer a share fund to my clients on the following basis:
1) As diversification against their property portfolios.
Most of my clients are ‘property people’ who value add the growth of their property CG into shares. If I can continue to average 15%+ medium to long term for them, they will be way ahead of their non-diversified property portfolios averaging 7% to 10%.
2) Conservative Australian Blue Chip Shares:
So as to maintain the lowest risk profile in shares . . . structured this way to suite the clients preferred and requested risk profiles.
3) Structured Portfolios:
The share fund is specifically structured as an income fund to best fit the clients portfolio and cash flow requirements.
These world authority share experts that believe they can achieve many times the index year after year . . . please,
Navrainvest is definitely NOT for you.
I aim to achieve the following:
a) Average 15% to 18% medium to long term for CG
b) Pay distributions in excess of 10% (or 2% greater than current interest rates) medium to long term for Income.
c) Maintain the lowest possible risk profile in shares, so as to match the requirements of my clients.
WHO CARES ABOUT THE INDEX when you are doubling the value of your total portfolio every 5 years
Sincerely,
Steve
