Week5 - blog PDF

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Week 6 Reflection:

Managed Funds have always been an investment that I have considered for myself. Due to lack of knowledge and time, I believe that it would be a great option for me to diversify my investment portfolio while essentially gaining a fairly regular source of income. An area that I was unaware of was the existence of unlisted

funds which I discovered were not listed on any exchange and are normally held for the duration of the investment for usually more than a few years. While it does not experience the same volatility that listed funds do, it comes with the trade off of being illiquid which is likely to not suit my wealth accumulation stage.

Whilst I have previously been exposed to Exchange Traded Funds through the news and my own research, it was interesting to learn more about the advantages and disadvantages of such investment. It requires no active management; it is a diversified investment and cost and tax

effective. In my understanding, it does not reap the same level of rewards that an active strategy would, I believe it is a good balanced option for my portfolio. An area I found a little difficult to follow was insurance bonds, wraps and master trusts. These are investment structures I intend to look into to greater understand their

differences especially when considered with my own situation. This week, I learned about managed funds such as strategy and selection further building on previous topics of portfolio construction and asset allocation. Since, managed funds are managed by professional’s, I believe it is very advantageous using them since little money is required, easy to use and include diversification. Thus, believe that is a great option personally to diversify my investment portfolio while gaining a regular source of income since these funds are well structured and regulated and investors can be assured qualified professionals are involved in the investment decision making process with their money. Furthermore, I have also learnt about the different types of managed funds and also similar alternatives such as listed and unlisted funds, ETFs, etc and benefits for example ETFs requires no active management since it is a diversified investment and cost and tax effective. Overall, I believe managed funds play a crucial role in simplifying the investment process.

Week 6 My Financial Plan: Managed Funds, Selection and Strategies

1. How much time in each month would you want to spend on managing investment? This greatly depends on my level of investment. Suppose if I am only investing few thousand dollars a month, I may only spend few hours a month. Whereas, if I had invested a much greater amount I would keep up with the trends and news and do more research and make changes accordingly to my portfolio. This could mean possibly spending 4-5hrs a week.

2.

Do you believe in active or passive funds management? Why?

I would prefer the active funds management option since they aim to beat the market returns and have a greater potential for higher returns. Whereas, passive investing is much simpler with lower expenses and taxes with less expertise required. However, I still prefer active funds management even though this comes with increased risk and higher fees but since they are aiming for higher returns, I am willing to take the additional risk.

3. Choose 2-3 managed funds that you would invest in and explain the reasons. A good place to start researching is www.morningstar.com.au. You can start from the fund category and consider the fund ranking by whatever criteria. I have chosen Perpetual Global Innovation Share (managed fund) and CFS FC W Inv-FirstChoice W MultiIdx Mod

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Both funds generated consistent high in recent times and have lower fees than the average. Both are fairly balanced funds which aligns with my risk tolerance Diversification into both domestic and international equity varies the exposure

Week 6 Client Engagement Skills:

Presentation of the Statement of Advice and conducting annual reviews are two important meetings in providing financial advice. Handling the annual fee disclosure and opt-in can be awkward. Imagine you are a trainee financial planning in your professional year watching Triston conducting these meetings. What structure and details can you pickup to incorporate into your practice? -

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Begin with an executive summary, discuss the objectives and the clients goals and how can they be achieved. Explain how these recommendations allows them to achieve their goals. Prepare plans for future and keep track of meetings, Educate clients on finances such as budgeting and investing and ensure they understand clarifying any questions they may have. Ensure your transparent, communicate effectively by keep things clear and simple for any age group of clients to understand. i.e. simple for an older person who may have no idea on financing terms. Ensure clients are informed of the resources available to them such as any services. Ask feedback from clients. use this to improve your future meetings and clients....