Did you know that there are over 11,000 registered managed funds in Australia, but only a little over 2,200 listed and public traded stocks on the Australian Stock Exchange (ASX). The ASX is that thing reported on the finance segment during the evening news.
So, how can it be that there are theoretically Five managed funds for every listed company out there, it is mind-boggling.
Effectively a swarm of professional money managers are making calls on the same businesses, at a rate of 5 to 1. Surely these same fund managers are not that enthralled to help the average punter?
So, what’s this all about then? Why have so many professional fund managers swarm over the same stocks and attempt to outdo each other, surely, they can’t all get it right?
So, how does this impact you? Well, quite poorly actually. Based on historical market returns and fund performance, 98% of these funds underperform the stocks they manage and the benchmark they set, and in most cases, they under-perform by their fees and transactions cost, expenses that are almost always passed through to you, the investor.
The fund’s management industry is highly incentivized to perform and to perform they need to money to invest, (yours and mine) to attract this money, strategically placed marketing lures are often very convincing to the unsuspecting eye. Now with many of these funds charging 1% or more to manage your money, they do okay out of it.
The number of fund managers to investable assets is pure waste. The closest analogy I could come up with is like having five politicians for every individual voter, effectively a parliament that is larger than the constituent they represent, it is ludicrous! My analogy is stupid, but so is the number of managed funds in this country.
These fund managers are everywhere, from your investments to your superannuation. It is time to inoculate yourself, ensuring that you’re looked after (financially) and not someone else’s meal ticket to a European sports car.
If you would like know which managed funds are right for you, give the team at Steve May a call and start a conversation today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
