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Q&A: Choosing a fund manager

Q. Could you give me some guidelines on how to pick a good fund manager to invest my money in? I agree with you that the worst of the stock market problems are behind us and I want to position myself for the big gains ahead. What’s your advice?

Natalie, Pyrmont, NSW

A. I can’t give advice to you as I don’t know your circumstances, your goals and risk appetite. That’s what a good adviser needs to know before he or she draws up a plan, but I can use their techniques to help you. Once the adviser knows what you want to achieve — pay off your house quickly, be debt-free, play the stock market for big returns or have $2 million in your super by the time you are 60 years of age — then they work out where you are now in terms of those goals. Next, they see how you can get to where you are going. That’s where the advice comes in, which might mean lifestyle changes, better saving and spending habits or specially selected funds and investment strategies that account for tax matters that pertain to their client.

This is what you need to do for yourself! Use the internet to get the latest performance tables of funds and then go to websites such as Morningstar and look for 5- and 10-year records of the funds’ performances. These are not always reliable guides but it’s a starting point. Get a list of say five funds and research them. Find out who the manager is and then research him or her. This person will look after your money, so know them back to front. By the way, you might have a few funds — advisers do this. They might use an index fund such as Vanguard and an active managed fund for Aussie shares. They might use a property fund and an overseas-focused fund to gain Asian, European or US exposure. If you don’t want to pay for an adviser to do the work, you have to do the research and if you don’t do it professionally, you might get amateur results.

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Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.




Published on: Thursday, August 06, 2009

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