While franking credits attached to Australian equity dividends can be a meaningful source of extra returns, a deliberate tilt towards franking can also introduce significant unwanted risks into the portfolio.
Author Archive | Raewyn Williams
Many large investors pay higher brokerage fees, hoping to gain favour with brokers to gain access to IPOs. Are rare IPO gains worth the loss of quality execution at the best price every day?
Fund managers are commonly using algorithms to derive and implement their investment strategies, and investors should be looking behind and beyond the computer code to understand the inputs.
Active managers trade more often and in larger amounts than passive managers do. Costs incurred from trading, in aggregate, can be substantial and ought to be considered in the decision to use active strategies.
It’s worth deciphering how active ‘active managers’ are, whether their outperformance is sustainable, whether they cancel each other out and whether they are true to label. Know what you’re paying for.
Passive investing typically incurs less tax than active investing but should be made even more tax-effective by using losses in the portfolio to offset taxable capital gains.
Large super funds have been successful in delivering strong investment returns, but the changing nature of the sector means more investment innovation is necessary for continuing long-term success.
Is the tax payable on your investment earnings eroding returns unnecessarily? Changes to the way fund managers invest so that tax-effects are part of the investment decision can make a meaningful difference.
Investing across many different managers may not deliver the expected portfolio diversification if managers invest in the same way. Watch for diversification redundancy.
We hear a lot about ‘factors’ but what are they? Both retail and wholesale investors are ploughing billions into these new ETFs and managed funds. Do they have a role alongside passive and active funds?
There are many ways to hedge against volatility, but often at a cost to the overall return of the portfolio. At what point is a smooth journey worth the impact on the destination?
The benefit of setting investment objectives is most apparent in times of market turmoil, but at any time, defining a preference for maximum returns or minimum risk will help to achieve the right outcome.
Often with multi-manager funds, each manager acts autonomously, unaware of what the others are doing. Funds that adopt a centralised approach can eliminate unnecessary trades and reduce tax inefficiencies.
Choosing a fund manager who outperforms the market on a pre-tax basis is good, but if you also consider the tax effect on that performance, you really start to identify who the best managers are.