I know that at least some forumites have investments in managed funds as well as property.
With the horrendous returns we have seen for the last couple of years (ie. -ve), it got me thinking about the fact that fund managers still continue to recoup their 2% (approx) management fee from you, regardless of whether they are making you money or not.
Would you ordinarily gladly hand over 2% of your principal to someone who lost money for you?
So I thought I'd post on the forum what people thought might be a fairer way for fund managers to be compensated. Some examples:
1. Fee paid only if +ve earnings.
2. Fee paid only if earnings > nominated rate.
3. Fee paid only if earnings > industry benchmark (eg. All Ordinaries).
4. Additional fees paid if over-and-above a nominated rate.
Obviously competition plays it part to prevent fund managers resting on their bums whilst still earning healthy "management fees", but given that a lot of these funds have either hefty entry or exit fees, it is not a trivial decision to move one's money from one fund to another subject to poor performance (accepting that some fund brokers will rebate most entry fees making the exercise less costly).
Personally, I'm sick of this fees-for-no-result policy.
With the horrendous returns we have seen for the last couple of years (ie. -ve), it got me thinking about the fact that fund managers still continue to recoup their 2% (approx) management fee from you, regardless of whether they are making you money or not.
Would you ordinarily gladly hand over 2% of your principal to someone who lost money for you?
So I thought I'd post on the forum what people thought might be a fairer way for fund managers to be compensated. Some examples:
1. Fee paid only if +ve earnings.
2. Fee paid only if earnings > nominated rate.
3. Fee paid only if earnings > industry benchmark (eg. All Ordinaries).
4. Additional fees paid if over-and-above a nominated rate.
Obviously competition plays it part to prevent fund managers resting on their bums whilst still earning healthy "management fees", but given that a lot of these funds have either hefty entry or exit fees, it is not a trivial decision to move one's money from one fund to another subject to poor performance (accepting that some fund brokers will rebate most entry fees making the exercise less costly).
Personally, I'm sick of this fees-for-no-result policy.