Fred114
16-01-2013, 08:18 AM
Bruce Sheppard from 2010 suggested that he wouldn't invest in managed funds due to the inherent moral hazard that the fund manager faces. At best the fund is managed within those hazards that the market throws up. He suggests that it is merely an uncomfortable compromise that clients face when investing with the funds.
He does offer this list of aspects to look for when investing in managed funds, somewhat facetiously, because he doesn't believe such information is available for an assessment, and the immorality extends to the investor.
* are closed rather than open.
* are structured so that you get to appoint as owners of the FUND, the directors.
* the management contract does not have an excessive parachute.
* the management contract can be cancelled by the board on notice and does not require a meeting of unit holders.
* the management contract is for a fixed base fee, not a percentage of assets.
* The manager's performances incentive is based on income and or real asset growth not bought asset growth.
* the board has a sound track record and no baggage.
* incentives are used to purchase units in the fund.
* the manger has invested a significant amount of his own money in the fund.
Taken from http://www.stuff.co.nz/business/blogs/stirring-the-pot/4016945/Investing-in-managed-funds
He does offer this list of aspects to look for when investing in managed funds, somewhat facetiously, because he doesn't believe such information is available for an assessment, and the immorality extends to the investor.
* are closed rather than open.
* are structured so that you get to appoint as owners of the FUND, the directors.
* the management contract does not have an excessive parachute.
* the management contract can be cancelled by the board on notice and does not require a meeting of unit holders.
* the management contract is for a fixed base fee, not a percentage of assets.
* The manager's performances incentive is based on income and or real asset growth not bought asset growth.
* the board has a sound track record and no baggage.
* incentives are used to purchase units in the fund.
* the manger has invested a significant amount of his own money in the fund.
Taken from http://www.stuff.co.nz/business/blogs/stirring-the-pot/4016945/Investing-in-managed-funds