Added on: Thursday, March 26th, 2009 13:10 pm
Keywords: Fixed Interest, Index Funds, Managed funds, Master Trust, Morningstar, Portfolio Construction, Volatility, Webinar, Wrap
Firstly thank you to everyone who participated in my recent RaboPlus webinar Beating Volatility Using Managed Funds.
As I noted during the presentation, any questions that I was unable to answer on the day will be answered on my blog. So in order to respond to all questions, I have broken my responses down into two areas:
1. Queries related to RaboPlus; and
2. Questions pertaining to broader investment issues.
I will deal with the questions relating to RaboPlus first. For anyone who wants to be informed of upcoming blogs, link up to my Confident Investor blog using the RSS feed here, or simply subscribe for email alerts by clicking here.
Question from Christopher Boast: Rabo offers a number of fixed interest and bond products. How would you rank them in terms of risk?
This is a great question and obviously a topic that has received a lot of attention recently.
To follow up my February 2009 Positive Interest newsletter article The paradox of portfolio construction, in the March edition I have looked specifically at the Fixed Income funds offered through RaboPlus. The article, Think long term when it comes to Fixed Income, provides a break down of historical returns, the importance of understanding the different types of securities within Fixed Income funds and also measuring risk.
Alternatively, you can access the risk, ratings and performance for each fund by going to the Fund Selector.
If you are not already a subscriber to Positive Interest, you can subscribe here. I expect that the newsletter will be available by the end of March.
Question from James Ackerman: Will RaboPlus expand the number of managed funds available to invest in?
RaboPlus offers customers access to 75 individual investment funds from nine different funds managers, many of them finalists and category winners in Morningstar’s recent Fund Manager of the Year Awards for 2008. And whilst we anticipate that we may never offer more than 100 funds, we are currently reviewing the potential addition of several new funds.
Funds under consideration include index funds, fund of funds and alternative investment strategies. And whilst the RaboPlus Investment Committee adheres to strict investment selection criteria, we also value feedback from our customers and all suggestions are raised with the Investment Committee for consideration. In fact, it was the many requests from our customers which prompted the Investment Committee to review index funds for potential inclusion.
Question from Paula Camilleri: I took advantage of the recent 0% promotion of entry fees that RaboPlus had. Do you think there will be another promotion like that again?
Yes!
In the past we have discounted our fees when adding new fund managers. But as the Global Financial Crisis worsened towards the end of 2008, RaboPlus took the initiative to further improve the cost effective access of our customers into wholesale managed funds. As a result we waved our 0.75% fee on all funds and it was fair to say that the offer was very well supported by our customers.
As you are no doubt already aware, in contrast to many online discount brokers, RaboPlus already provides our customers with excellent value for money when accessing wholesale managed funds. Of course, the brokers typically offer more expensive retail funds.
RaboPlus also delivers our customers excellent value when compared to most wraps or master trusts often used by financial planners. More importantly, you can also avoid financial advisor fees if you are prepared to do it yourself.
We already know that we offer our customers great value, and we’ve recently commissioned a piece of independent research to show how RaboPlus compares with wraps and other online brokers. I look forward to providing you with more detail on this research once it’s available.
Question from Peter Jamieson: Have you reduced your platform cost over the last 6 mths? When I looked last about then the fees were not competitive. I’ve found that the ongoing cost of a platform plus wholesale, is not much of a saving (or actually more expensive) compared to retail - care to comment?
RaboPlus doesn’t charge any ongoing or exit fees, it only charges a 0.75% fee on an investment into a fund. So compared to online brokers for example, we are very competitively priced for long-term investors. As I mentioned to Paula (above), we know that we offer our customers great value, and we’ve recently commissioned a piece of independent research to show how RaboPlus compares with wraps and other online brokers which I’ll share through my blog shortly.
RaboPlus has not changed the fee structure on managed funds since the business launched on 23 May 2007. And as we rapidly approach our two 2 year anniversary, it is fair to say that the Australian market has changed significantly over this timeframe.
We are very proud of the fact that we continue to provide investors with one of the most cost efficient online investment platforms in the market and our ability to deliver investors with cost effective access to a select offering of wholesale managed funds is unmatched by our rivals. And as per my response to Paula above, we’ll soon have the independent research to show that we offer customers the most cost efficient access to wholesale managed funds when compared to wraps and online brokers.
One of the reasons why RaboPlus offers such great value is that we don’t charge our investors ongoing or administration fees. Therefore, the longer you invest with RaboPlus, the cheaper we are compared to our competitors who charge a range of entry, exit, ongoing and expensive administration charges just to access retail funds.
Not convinced? I challenge you to find a better offer…
If you believe that you can find better comparable value in accessing the same wholesale fund on another platform over the timeframe prescribed in the Product Disclosure Statement (PDS), then we’ll waive our 0.75% fee for all customers on all funds from that Fund Manager for month of May 2009. You’ve got one month from the date this blog is published to find a wholesale fund on another platform that can deliver better value than RaboPlus.
So why pay retail when you can go wholesale with RaboPlus and save yourself a bucket-load?
By the way, if you do find a cheaper offering, make sure you let Paula know…Good luck!
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