By Susan Hely,
, October 2007
Managed funds: all you need is $80
If you don't have much spare cash, these managed funds are for you.
Here's a range of managed funds that you can invest in with as little as $80 much less than the $1000 required by some managed funds, or the $2000 or $5000 wanted by others to start an investment. Some boutique managers allow only a minimum of $25,000.
The seven managed funds recently renamed ME Investment Funds have been around for five years. Once only open to the members of 40 of Australia's largest superannuation funds, they're now open to anyone. The "ME" stands for Members Equity the super funds bank that also has a low-cost home loan, business loan, personal loan, credit card and other financial products.
The managed funds allow you to start with $80 and then contribute $80 a month through a regular savings plan. Once you reach $1000, you can stop the regular savings, or open an account with $1000. There are no establishment or termination fees, only low ongoing management fees. "You can vary or stop your regular monthly investments at any time, provided a minimum balance of $1000 is maintained in each ME Investment fund," explains Anna Parente, manager of retail products at ME IFS.
Selecting a managed fund
There are four diversified managed funds (secure, income plus, growth and high growth) and three sector funds (Australian, international and property). They don't pay commissions to advisers, which is rare; most managed funds, even if you buy them direct from the manager, charge an upfront commission of around four percent and a trail commission of 0.5 percent. Annual management fees range from one percent for the ME Secure Fund up to 1.54 percent for the ME Growth, ME High Growth, ME Australian Shares and ME International Share funds. Earnings are strong 18.6 percent per annum over the past five years, just beating the benchmark by 0.4 percent. For more, see www.investwithme.com.au.
Rabobank a global agribusiness banking leader has launched a retail Internet-managed investment service with a low minimum initial investment of $250 www.raboplus.com.au. It isn't a household name but it has an AAA credit rating from Standard & Poor's the only bank here with such a high rating.
Investors can choose from 50 funds managed by six investment management groups such as AMP and Schroders. Investors pay an entry fee of 0.75 percent of the amount invested and management fees charged by the underlying funds. Most of the funds are wholesale funds and charge wholesale fees.
For the complete story see Money Magazine's October 2007 issue. Subscribe now.
Keep reading - next article