Are unit trusts any good?
- Thread starter leobox1
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Don't understand what you mean by the 5%.
Unit trusts offer professional management of a diversified portfolio in assets that are hard or even impossible to access for investors otherwise. However:
(1) Active managers as a group will underperform the market and most people cannot pick the winners ahead of time. Coupled with most investors' tendency to chase performance, it is likely that most people will underperform the market.
(2) The platform fees, unit trust sales charges, redemption charges, management fees etc. are excessive, resulting in even more underperformance. This is all the more obvious in the current era of low absolute returns.
(3) The rise of ETFs, a much more cost-effective investment vehicle, means there is no real reason to invest in unit trusts, unless you have a thing for a certain manager.
Unit trusts offer professional management of a diversified portfolio in assets that are hard or even impossible to access for investors otherwise. However:
(1) Active managers as a group will underperform the market and most people cannot pick the winners ahead of time. Coupled with most investors' tendency to chase performance, it is likely that most people will underperform the market.
(2) The platform fees, unit trust sales charges, redemption charges, management fees etc. are excessive, resulting in even more underperformance. This is all the more obvious in the current era of low absolute returns.
(3) The rise of ETFs, a much more cost-effective investment vehicle, means there is no real reason to invest in unit trusts, unless you have a thing for a certain manager.
I disposed of my unit trusts and implemented my own passively managed portfolio using stock index ETF, gold, govt long bonds and cash, all easily available. No need to monitor these assets throughout the year, just spend an hour or less at end of every year to rebalance the portfolio.
I had to study the strategy and prove it to myself before i implemented it - passive investing is not very difficult to learn or understand. Time spent to understand passive investment is worth it because i dont have to pay yearly 1%~2.5% annual fees for underperforming unit trusts anymore.
If you still use unit trusts, best to ensure you have some bond components in the unit trust itself or in the portfolio of unit trusts. Holding on to a pure equity unit trusts and not monitoring it is an effective way to lose money.
I had to study the strategy and prove it to myself before i implemented it - passive investing is not very difficult to learn or understand. Time spent to understand passive investment is worth it because i dont have to pay yearly 1%~2.5% annual fees for underperforming unit trusts anymore.
If you still use unit trusts, best to ensure you have some bond components in the unit trust itself or in the portfolio of unit trusts. Holding on to a pure equity unit trusts and not monitoring it is an effective way to lose money.
Etf seems good. But is there any cheap way to buy it? Is it on sgx ? I didn't buy stocks because I tend to rsp myself a few hundreds at a good .. Paying commission of say $20 for a buy of $300 is high !!!!
About 5% I meant my performance so far is about that. Pathetic right ?
About 5% I meant my performance so far is about that. Pathetic right ?
Etf seems good. But is there any cheap way to buy it? Is it on sgx ? I didn't buy stocks because I tend to rsp myself a few hundreds at a good .. Paying commission of say $20 for a buy of $300 is high !!!!
About 5% I meant my performance so far is about that. Pathetic right ?
Here is info about buying STI ETF regularly:
http://forums.hardwarezone.com.sg/stocks-shares-indices-92/poems-sharebuilder-plan-sti-etf-3780580-5.html
If you accumulate sufficient capital one day, it could be better for you to start a diversified passive portfolio yourself for better returns.
About 5% I meant my performance so far is about that. Pathetic right ?
It is hard to know without more details on the timeframe and which market or asset you are invested in.
Here's what you can do to assess your unit trusts' performance. First, find an appropriate benchmark, like the Straits Times Index for Singapore stocks or the S&P 500 for US stocks. Second, see how it has performed in the same timeframe compared to your benchmark. The STI is up about 15.1% and the S&P 500 up 15.7% respectively, year-to-date. Third, you can also compare it with other unit trusts that have similar objectives.
It's about 5% for 1 year. Roughly 30% Asia PAC ex Japan 30% Emerging Markets 40% SG centric bonds. Sorry if my questions are noob. Is it UT very terrible investment method ? Cause I hAve everything established le. Will not move unless its really pointless. Thanks appreciate it
So this is a bond fund? If they have such a broad mandate then it is hard to compare, but see what benchmark the fund itself uses.
I really like what you said. Is there a way to do this using CPF OA or SA funds? Are you referring to cash only?
Quite keen to invest it but careful.
Quite keen to invest it but careful.
Can use both cash and CPF OA for passive portfolio investing, i use my cash and CPF OA for separate passvive portfolio. My CPF portfolio is 30% STI ETF, 30% 30yr S'pore Govt. Bond, 30% CPF Cash, 10% Gold ETF, to be rebalanced yearly - all bought at once using multiple brokerage in April this year. Total returns including cash interest, for last 6 months, is about 4.25%, not bad for half year of doing nothing.
Yes please be careful and learn any investment strategy well, to know the pros and cons and whether the risk and returns meets your objective. Good thing is passive investing does not need much talent to implement.
To start off your learning, read this to know what a basic passive portfolio investing is about:
singaporeans-investing-cheaply-with-exchange-traded-index-funds.
This is basic stock index ETF+bond passive portfolio - personally i think this portfolio is ok and is simple to implement, though IMO this 2 assets is not diversified enough for me.
Next, read this about more diversified passive portfolio using Permanent Portfolio Strategy:
Permanent_Portfolio
This uses highly volatile 'stock index ETF+long govt bond+gold' and cash to form a low volatility portfolio. You have to learn about why people such as fund managers invest in govt. bonds and gold.
Then you can go to my blog for ideas about local implementation of Permanent Portfolio passive portfolio:
Singapore Permanent Portfolio Investment Strategy
PP strategy is also widely explained in the Internet.
Which ever passive portfolio strategy you use is up to your comfort level. The main thing about passive ivesting is choosing asset allocation and yearly rebalancing. Keep long term running cost low.
I will highlight advantages of passive portfolio:
-No need to monitor portfolio consistently, or pick stocks, or market time entries and exit - this removes a lot of human errors.
-Lower maximum potential loss in major market downturn, due to bond price appreciating during stock market downturns.
-Near market bottom, potential to sell off bonds that are doing well to buy cheap stocks .
-Force investor to buy assets when they are cheap and sell expensive asset to realise profits.
-Long term returns of passive portfolio is similar to that of pure stock index ETF. Stock/bond portfolio has lower risk compared to pure equity portfolio.
-Aim of passive portfolio is for reasonable 'market returns', not for 'beating the market'. IMO, in general, expected long term returns should be 7%~10% per year.
Cons of passive investing strategy?
-When stocks prices are soaring in bull markets and others with pure stock portfolio are saying how they make above 40% returns, passive portfolio with its decreasing bond prices will make less returns at say 20% only - so no bragging rights for passive portfolio holders. IMO this is not a disadvantage, because the maximum loss and gains of passive portfolio are both lesser, so passive portfolio holders suffer less and are more likely to stick with their passive strategy during market downturns.
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Here is what I've written on United SGD Fund: http://forums.hardwarezone.com.sg/stocks-shares-indices-92/uob-fund-return-trumps-peers-3878447.html.
Assuming you are referring to the Aberdeen Pacific Equity Fund and the Aberdeen Global Emerging Markets Fund, both seem to be doing OK relative to benchmarks after the annual management fees and expenses (1.78% and 1.79% in the last annual report), but before the 5% sales fee. These are well-established and large funds (AUM 1.1b and 400m), and the managers seem to know what they are doing, but they are handsomely paid for that.
Since you are already in this, the longer you hold the better, because over time the sales fee evens out. ETFs that cover roughly the same area such as iShares' EPP and EEM or Vanguard's VWO charge less - 0.50%, 0.67% and 0.20% respectively - but there are disadvantages such as brokerage costs.
Thanks. btw you have fully paid up your housing loan?
when first grad around 22, is much easier decision, now gotta look at other considerations.
when first grad around 22, is much easier decision, now gotta look at other considerations.
I have not used my CPF for housing yet. Now just investing for more returns till the day i use the CPF for housing. When i get housing loan, i hope to still have some CPF OA left for investing, as i believe i can get higher returns than the housing loan interest... see how then. Yes, our investment decision is determined by our individual circumstances.
Chasing after the lastet hotest fund... I have heard that such funds may have had their moment of glory and it could be downhill from there...
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do some search on boutique hedge fund. don't mistake industry-specific fund as one. good boutique hedge funds can produce high roi consistently that it is commonly experienced private bankers hunt for them. they choose the clients.
Not sure if you are trolling or you are being serious. Ask your banker for boutique hedge funds, only then he will show you the good stuff. I never knew hedge funds are just like durians
I'm reading a new book by Simon Lack, The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True. This hedge fund insider says hedge funds mostly make money for their managers, not their investors. It's the old but still relevant question, where are the customers' yachts?
XRegaX
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You can invest in unit trusts which have quarterly dividend payout, which is usually reinvest back. You can invest in using a single premium method, and without topping up any money, execute the Dollar Cost Averaging using the benefit to reinvested dividend payouts.
Can just get an IFA to a balanced portfolio of your risk level and tell IFA you wants all unit trusts which have a dividend payout.
Just need to google (removing the " quotes) to get a whole range of unit trusts with dividend payouts.
"site: fundsupermart Historical Dividend (Click here for details) Yes"
If you need an IFA recommendation, you could pm me.
Hope this can help you. Cheers. Sorry can't add links in main post thats y need to pm u
your book is correct that most funds including hedge funds out there exist to make fee and commission with miserable performance. but there are some good ones with tracked record that can make your jaws drop and usually small in setup. they are known by a small elite circle of REAL private bankers internationally. the question is whether your banker is trolling or being serious.Not sure if you are trolling or you are being serious. Ask your banker for boutique hedge funds, only then he will show you the good stuff. I never knew hedge funds are just like durians
I'm reading a new book by Simon Lack, The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True. This hedge fund insider says hedge funds mostly make money for their managers, not their investors. It's the old but still relevant question, where are the customers' yachts?
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