Performance
The Buy Write Strategy is a hard one to out perform with if you are going to maintain a diversified portfolio which a fund manager is “required” to do for risk management purposes - though I will concede it is possible. It is my view that Macquarie take a pretty conservative approach to their trading and this is a strong benefit from a risk management point of view, although is does reduce return compared to an aggressive approach. Take a look at the volatility - under 7% - as compared to the volatility of the index - over 9%. Statistically this is a BIG reduction in risk for a relatively small reduction in return. So I would not go into this with an expectation of constant out performance but a well managed approach to optimise the risk / return ratio.
The index remember has no costs attached. So even ignoring the fees you would be charged in a structured version of the product you would have had to pay broking fees on any trades you would have done. Even with a discount broker (I would not recommend trading that way), you are probably looking at 0.5% in and out, remembering that the shares, especially in the current environment, would be traded a number of times in a year.
And of course if you were trading on your own behalf you would not have the risk management, availability of capital protection and 100% finance options.
sonic said:buy write fund performance since inception was 14.04% p.a. s&P / ASX buy write index was 15.86% it also quotes s&p / asx 200 accumulation index was 26.29% p.a. but i don't think this is a relevant benchmarket.
anyone know the reason for underperformance against the asx buy-write index benchmark?
The Buy Write Strategy is a hard one to out perform with if you are going to maintain a diversified portfolio which a fund manager is “required” to do for risk management purposes - though I will concede it is possible. It is my view that Macquarie take a pretty conservative approach to their trading and this is a strong benefit from a risk management point of view, although is does reduce return compared to an aggressive approach. Take a look at the volatility - under 7% - as compared to the volatility of the index - over 9%. Statistically this is a BIG reduction in risk for a relatively small reduction in return. So I would not go into this with an expectation of constant out performance but a well managed approach to optimise the risk / return ratio.
The index remember has no costs attached. So even ignoring the fees you would be charged in a structured version of the product you would have had to pay broking fees on any trades you would have done. Even with a discount broker (I would not recommend trading that way), you are probably looking at 0.5% in and out, remembering that the shares, especially in the current environment, would be traded a number of times in a year.
And of course if you were trading on your own behalf you would not have the risk management, availability of capital protection and 100% finance options.
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