How to choose a managed fund
QFirst, many thanks to you and the team for all the great investment information over the years. I have been looking for a suitable investment for my older teenage kids, but it is easier said than done.
Together with the kids’ grandmother we have saved around $7000 each for then. The kids have also put away a third of their part-time wages. I would like to find a managed fund, predominately Australian investments, at least moderate growth and therefore okay risk, given their ages, and minimum re-investment of no more than around $500.
There are many organisations with a huge number of options, but the assistance they offer is limited, which makes it difficult to select. Any thoughts/ideas to point us in the right direction would be greatly appreciated.
I agree with you in regard to the complexity of what should be a relatively simple process. You’d think that financial services companies would love new, young investors. They are the future for any investment manager. But trawling through their websites is like being in a maze. There are usually many products; confusingly, some are listed, some unlisted, some are ETFs, with all sorts of names and different “series” of products.
Let’s try to simplify this a little. What you need, in my view, is a fund with a long-term outlook, so a growth style-fund makes sense. You need a well-known manager with very low fees and a good track record. You could buy a listed ETF that would do this, but that requires a trading account and it is not so easy for regular top-ups.
It is worth persevering here. It will make such a difference to the kids in years to come. So, if your strategy is to find a large, globally diversified growth fund, with low fees and the ability to make small top-ups, I’d give a few of the leaders a call. I mentioned Vanguard in my answer to Tony (page 25), so maybe you could call it; Magellan is also worth a call; and Perpetual has a good history with broadly based funds.
If you called them with a clear statement that you are investing for your kids, you want a low-cost, broadly diversified fund with the ability to make small top-ups, they should give you a quick, clear and straightforward answer and email you the process you need to follow to invest.
If you have a moment, I’d be really interested in hearing the result of you making a few calls.