Canstar and managed funds ratings

Lyodieosl on 09/09/2018 - 16:59

So I've been looking at where I can put money that will be better than just a high interest savings account.

I ended up looking at Canstar's managed funds page: https://www.canstar.com.au/managed-funds/

But I think I'm understanding their information wrong, because it looks like for most categories, they seem to show that the funds will just lose you money.

For example, pick "Multi-Sector Balanced" and put in '50000' for investment amount. The first numerical column is "the amount that 50,000 invested 5 years ago would be worth now". The last column is "annual cost for 50000 investment".
In almost all the cases, the value in the first column is smaller than or barely more than (50000 + annual cost * 5). It doesn't matter if I look at the highest rated funds, or the highest return funds, or the lowest cost funds. It seems like basically, you get back nothing.

This seems to be the case for most of the options under "Type of managed fund"- with very few exceptions, canstar's information seems to show that if you invest 50,000 in any of these funds 5 years ago, you'd be paying so much fees that you'd either be barely breaking even or losing money.

This seems wrong, especially seeing as canstar is rating these funds and giving fairly high ratings. So like… am I seriously mis interpreting the information in these tables?

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Comments

  • twinbag on 09/09/2018 - 17:53

    Makes no sense to me either. The returns would be after fees, but if I look at the performance tab it says 6.89% p.a for the last 5 years, which would give way more than $54,000.

    • yodieosl on 09/09/2018 - 21:22

      Yeah i wish they'd explained how they got to those numbers. It just doesn't make sense but I feel like there's some assumptions that I'm not getting.

  • zaddaz on 09/09/2018 - 18:26

    Yeah, i think the fees are too high. My friend did some reserach and put his money into an index fund like the AX 100 (or ETF equivalent) and the international shares equivalent.

    • yodieosl on 09/09/2018 - 21:23

      Is there a good comparison site for index funds?

      • [Deactivated] on 09/09/2018 - 23:10

        https://www.morningstar.com.au/ETFs/PerformanceTable

        http://www.etfwatch.com.au

        You can’t look at returns across funds and base your decisions on those only. There are passive and smart beta etfs which track all sorts of indicies. You want to read the PDS for any fund you are considering and look at the charges and it’s investment objective and strategy.

  • [Deactivated] on 09/09/2018 - 18:43

    The returns are calculated on nav figures which take the fees into account. 1 year return percentage is the most recent 12 months, not the annualised 5 year return.

    • yodieosl on 09/09/2018 - 21:24

      Hmm ok that would be the only way the returns and fees columns make sense.

      "1 year return percentage is the most recent 12 months, not the annualised 5 year return."
      What do you mean by this? Like are you saying the numbers don't add up, because the 1 year return is only for the most recent year, but the previous four years could have had lower returns?

      • [Deactivated] on 09/09/2018 - 22:59

        Yes that is what they are doing. If you click on the header of the 1 year return it also says one year return is for the last year only. The returns in previous years must have been lower than last 12 months.

  • ribze1 on 09/09/2018 - 20:01

    ETFs > MFs

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