Managed Investments Funds - New to Funds

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Anyone can be an investor with RaboDirect

Contrary to popular belief, investing doesn't have to be difficult and you don't have to be loaded. There's nothing wrong with putting your hard-earned on deposit but not everyone realises inflation may be taking its toll and over the long-term you could actually be losing money. Investing is just another option open to you. You work hard enough for it right? Might as well make sure it's earning as much as it can for you.

Find out how to invest

How much do I pay?

Generally, when you invest in a fund, you are allocated a number of units in the fund. The unit price is calculated by taking the total value of all of the fund’s assets on a particular day, adjusting for any liabilities, then dividing the net fund value by the total number of units held by all investors on that day.

The number of units you receive depends on the amount you invest and the current unit price. For example, if you were to invest $5,000 in a fund with a current unit price of $2, you would receive 2500 units. The fund manager regularly resets the unit price, usually on a daily basis. The unit price reflects the current value of the fund’s assets, less its liabilities.

Entry fees and management fees may apply to certain funds. These are outlined in their investment statements.

Where does my money get invested?

With RaboDirect you access to a wide variety of Managed Funds. While they all have their own particular characteristics, each fund can be generally categorised by:

  • The assets it invests in (type of asset class, multi-sector or single sector).
  • Its investment style (active, passive, growth, value or style neutral).

Assets

Funds typically offer investors access to five main asset classes:

  • Cash
  • Property
  • Fixed interest
  • Shares / Equities
  • Alternative investments.

Single-sector funds concentrate on a particular asset class, such as New Zealand shares or fixed interest. Single-sector funds can be useful in complementing other investments you may have. For example, if you already have share investments, you might consider investing in a fixed interest fund for greater diversification across your entire investment portfolio. Alternatively, you might choose to invest in a portfolio of different single-sector funds, giving you personal control of your overall asset mix.

Diversified, multi-sector funds invest across a range of different  assets, offering you a diversified portfolio in a single investment. The precise asset mix adopted by a fund determines its individual risk-and-return characteristics. For example, a conservative fund might allocate a high proportion of its assets to fixed interest investments, such as bonds, while a growth fund might invest the majority of its assets in New Zealand and international shares.

Common investing styles

Funds can be passively or actively managed.

Passive or index funds aim to track a financial index as closely as possible. For example, a passively managed fund may track an index, such as the NZX50 by investing in a portfolio of shares that is intended to replicate the index. The goal of the fund manager is to ensure that the unit price rises and falls in line with the index. The main advantage of passively managed funds is that they are generally less expensive than actively managed funds because expensive stock analysis is not required.

With active funds, the fund manager actively manages the fund's investments in an effort to get the best possible return consistent with the fund's investment rules and risk characteristics. In most cases, the aim of an active fund manager is to outperform the index by picking stocks that they believe will perform better than the index return.

However it is important to be aware that not all active manager are the same. Different fund managers prefer different styles.

Here are some of the more common styles:

Style

How they do it

Growth

Growth managers seek out companies they believe can grow their earnings faster than the industry or overall market. The growth manager hopes to benefit from an increase in the price of a stock.

Value

Value managers focus more on a stock's current value relative to earnings. They aim to identify companies they believe are undervalued by the market, with the aim of benefiting from an increasing share price when the rest of the market recognise those companies' true value.

GARP

Growth at a reasonable price (GARP) managers combine techniques from growth and value managers, and aim to identify investment opportunities throughout the economic cycle. They consider both earnings growth potential and value to try to find stocks that are likely to outperform but are currently undervalued.

Style neutral

Style neutral managers adopt neither a value nor a growth style and do not have a particular bias to a group of stocks. Their objective is to protect their portfolios from investment extremes

Managed funds are subject to risks and this will vary from product to product . 

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Money pile smallManaged Fund Reviews

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To enable further analysis of managed funds, may I suggest that all of the data available for them on your website currently (i.e. buy/sell price, performance, fees, etc) be made available via a downloadable Excel file. This would enable potential investors to sort the funds according to their own criteria and view all criteria simultaneously. I realise this can be done manually, but it's very time consuming!

Reviewer: Andrew

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Hi there, I'm interested in the term advantage fund. It specifies no fees but is there anything a potential investor should be aware of?

Jill Rudings, Customer Service Manager: Hi Todd. That’s great that you are interested in the Term Advantage Fund (TAF). The TAF is very much like a term deposit, but designed as a Portfolio Investment Entity (PIE) so you may reap the benefits of a 28% tax rate if you are in a high tax bracket. To answer your question, there are no fees unless you opt to exit the Term Deposit prior to maturity and then there is a charge of up to $250.00, but do feel free to read our FAQ’s for all the information on this product.

Reviewer: Todd

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Hit there. Given the downward price movement in the Tyndall Income Fund (more than some of the highest risk) might it be time to assess it's medium risk rating? With Asteron winding up its funds will you be introducing some other low/medium risk funds to your platform? Not a lot of choice.

Reviewer: Bastiaan

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