When it comes to the best-managed funds in Australia or the top performing funds, there is a range of factors that need to be taken into consideration.
These include the time frame of the returns – short, medium or long term – the markets they are competing in, the indexes they may be tracking - the list goes on. Another key consideration should be whether, as an investor, your personal financial situation suits which funds you qualify to invest in. It is important to consider which funds meet your personal investment strategy, not just because they were the best performing over the past year.
In Australia, there is a wide range of managed funds, over 12,000 in fact, that offer a wide variety of risk profile, asset makeup, time frame and minimum investments.
As reviewed at 8.10am on Wednesday 3rd April, over the past three months, AMP Capital - Property Securities have returned 12.68% while over 3 years have realised 10.05% whereas the Hyperion Global Growth Companies B has returned 8.18% in the three-month period and 20.6% in the 3 years. Savvy investors should take the time to understand that different funds offer different strategies, different time frames and different asset mixes[1].
Funds can be made up in many ways, however, they usually are formed around the asset class they belong to. For example, cash funds, fixed interest & bonds, mortgages, shares, property etc. In addition, they can be made up in a single asset or mixed asset class. A single asset, as the name suggests, are managed funds offered in Australia that focus on one particular asset, such as international shares.
A mixed asset option, however, uses a range of asset classes to achieve the focus of the fund. These can include taking a share position in a company, derivative, property and a mixed-use fund that the fund manager deems necessary to maximise the potential of realising the overarching investment strategy.
According to ASIC, there is a range of mixes by which the funds can be made up, the most common of which is known as growth, balanced, conservative and cash.
Growth portfolios are primarily (85%) made up of shares and property and the rest in cash and fixed interest. Growth portfolios have expected returns of around 6.2%, however, are exposed to a high level of volatility, by comparison, losses in 20 years can be expected in 4 to 5 of those years.
Balanced funds have a lower level of volatility thanks to being 70% shares & property, while the rest is in cash or fixed assets. With a lower expected rate of return of 5.7%, this portfolio can expect a loss 4 years out of 20.
Conservative as the name suggests provides little to no expectation of a loss and returns of 4.2% as 70% is in cash or fixed assets, while only 30% are in shares and property[2].
Cash is another investment strategy with extremely low returns expected of 2.9%, they have very little volatility and put 100% of the investment into Australian deposit-taking institutions.
There is a range of other funds including commodities, international shares, international companies, emerging markets, foreign exchange and many more. To ensure you select the
[1] https://www.investsmart.com.au/managed-funds/top-funds accessed at 8.10am on Wednesday 3rd April 2019
[2] https://www.moneysmart.gov.au/investing/managed-funds/choosing-a-managed-fund
For the full breakdown on managed funds check out our article: The essential Information you need when looking to invest in managed funds.
We welcome you to give our team a call to discuss your investment goals and objectives.
You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.
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