Direct Managed Funds - ComSec

Direct Managed Funds
www.commsec.info/managedfunds
Save On Fees
Invest Through CommSec and Save!
CommSec is Australia’s number one online broker and it’s not hard to see why. A great range of investment products, free online
research, tools and expert commentary make it a simpler, smarter way to manage your portfolio.
All this, plus real savings on fees! When you invest in managed funds through CommSec Direct Managed Funds, you’ll save up to
100% on fund entry or contribution fees*. Many funds charge an entry fee of up to 4% that can really add up over time, especially if
you’re growing and diversifying your portfolio.
Nominate CommSec as your fund broker today to take charge of your investing and save on entry and/or contribution fees — and
use those savings to build a bigger portfolio.
Why CommSec?
• Choose from over 1,000 funds, including super, pensions and structured products, from over 60 leading fund managers.
• Find the right funds for your needs with our free research — search for funds by investment type, fund manager, performance
and more, then compare them with our Compare Funds Tool.
• Save with a rebate of up to 100% of the fund entry or contribution fees charged on initial and regular investments into managed
funds, super and pension funds.
• Track the performance, assets and investment strategy of each fund in your portfolio.
• Monitor your investment with our free Portfolio Monitoring tool**.
• Free newsletters to keep you up to date with the latest investment trends and opportunities.
Start Saving Today
Nominate CommSec as your fund broker for new fund investments and existing fund investments. CommSec’s Contribution Fee
Savings Calculator enables you to compare investments through Direct Managed Funds with investments via a fund manager or
financial adviser that may charge a contribution fee. A simple calculation shows the impact contribution fees have on the initial value
of your investment and the lost earnings from these fees over the investment period.
Step
Process
1 Complete the Fund Broker Nomination form. You need to complete a separate form for each fund
manager you have holdings with.
2 Complete the form/s and send to :
CommSec Direct Managed Funds
Locked Bag 22
Australia Square NSW 1215
Or fax to 02 8223 7160
3 Subscribe to our free investment newsletters.
If you have any questions about completing the form, or would like to know how the rebate applies to your existing investments,
please call us on 13 15 20, Monday to Friday, 8am – 5pm, Sydney time.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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Why Managed Funds?
Pool your resources
Diversify
Invest with the
professionals
Start small right now
Access your money
when you need it
When you pool your investment capital with contributions from other investors in a fund, you can
access investment opportunities that might be out of your reach as an individual.
Diversification means spreading your investments over a wide range of different assets. Funds can
offer a level of diversification that would be difficult for individual investors to achieve.
When you invest in a fund your investment is managed by a dedicated team of qualified
professionals, often supported by the resources and infrastructure of a large financial institution, or
by specialist managers with expertise in a particular kind of investment
Many funds let you start investing with as little as $1,000. You’ll be surprised how quickly a small
investment can grow, particularly when combined with a regular investment plan.
When you invest in a fund (other than a super fund), you can generally withdraw all or part of your
investment quickly to access your money when you need it. That’s something that can be difficult
with some other investments, such as property.
How Managed Funds Work
Units and Unit Prices
Generally, when you invest in a fund, you are allocated a number of units in the fund. The unit price is calculated by taking the total
value of all of the fund’s assets on a particular day, adjusting for any liabilities, then dividing the net fund value by the total number of
units held by all investors on that day.
The number of units you receive depends on the amount you invest and the current unit price. For example, if you were to invest
$1,000 in a fund with a current unit price of $2, you would receive 500 units. The fund manager regularly resets the unit price,
usually on a daily basis. The unit price reflects the current value of the fund’s assets, less the cost of administering the fund.
Fund Distributions
Most funds pay you income in the form of regular distributions. These distributions represent income earned by the fund from its
assets — for example, rental income from property, or dividends from shares. You may have the option of reinvesting your fund
distributions by buying extra units.
Types of Managed Funds
A wide variety of funds are available in Australia. While they all have their own particular characteristics, each product can be
categorised by:
• Its structure (managed fund, super fund, allocated pension or annuity).
• The assets it invests in (multi-sector or single sector).
• Its investment style (active, passive, growth, value or style neutral).
Structure
There are three main types of funds: managed funds, super funds and retirement income funds. Each has a slightly different legal
and tax structure, but they work in a similar way and offer similar investment options.
Managed funds, sometimes referred to as unit trusts, can be purchased with ordinary (non-superannuation) money. There are
generally no restrictions on withdrawing or investing into a managed fund. It is possible for the redemption of units in funds to be
delayed or suspended as defined in the fund’s PDS.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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On the other hand, super fund money generally can’t be accessed until you reach retirement age. One of the benefits of super funds
is the more favourable tax treatment they receive compared to other managed investments.
Retirement income funds (for example, allocated pensions) provide regular income in return for a lump-sum investment. They are
generally used by retirees rolling over their super savings, and provide an retirement income which may supplement or replace the
government Age Pension.
Assets
Funds typically offer investors access to five main asset classes: cash, property, fixed interest, shares and alternative investments.
Single-sector funds concentrate on a particular asset class, such as Australian shares or property. Single-sector funds can be
useful in complementing other investments. For example, depending on your needs and circumstances, if you already have share
investments, you might consider investing in a fixed interest fund for greater diversification across your entire investment portfolio.
Alternatively, you might choose to invest in a portfolio of different single-sector funds, giving you personal control of your overall
asset mix.
Multi-sector funds (also known as balanced funds) invest across a range of different kinds of assets, offering you a diversified
portfolio in a single investment. The precise asset mix adopted by a fund determines its individual risk-and-return characteristics.
For example, a conservative fund might allocate a high proportion of its assets to fixed interest investments, such as bonds, while a
growth fund might invest the majority of its assets in Australian and international shares.
Investment Style
Funds can be passively or actively managed.
Passive or index funds aim to track a financial index as closely as possible. For example, a passively managed Australian share fund
might track the S&P/ASX200 index by investing in a portfolio of shares that is intended to replicate the index. The goal of the fund
manager is to ensure that the unit price rises and falls in line with the index. The main advantage of passively managed funds is that
they are generally less expensive than actively managed funds because expensive stock analysis is not required.
With active funds, the fund manager actively manages the fund’s investments in an effort to get the best possible return consistent
with the fund’s investment rules and risk characteristics. In most cases, the aim of an active fund manager is to outperform the
index by picking stocks that they believe will perform better than the index return.
That’s not to say that every active manager is the same. Like musicians, different fund managers prefer different styles. Some are
simply variations on a theme; others are as different as punk and Puccini. Here are some of the most common as classified by:
Style
Growth
Value
Growth at a
reasonable price
(GARP)
Style neutral
How they do it
Growth managers seek out companies they believe can grow their earnings faster than the industry
or overall market. The growth manager hopes to benefit from an increase in the price of a stock.
Value managers focus more on a stock’s current value relative to earnings. They aim to identify
companies they believe are undervalued by the market, with the aim of benefiting from an
increasing share price when the rest of the market recognises those companies’ true value.
GARP managers combine techniques from growth and value managers, and aim to identify
investment opportunities throughout the economic cycle. They consider both earnings growth
potential and value to try to find stocks that are likely to outperform but are currently undervalued.
Style neutral managers adopt neither a value nor a growth style and do not have a particular bias to
a group of stocks. Their objective is to protect their portfolios from investment extremes
Managed funds are subject to risks. These will be specified in the risks section of the PDS and will vary from product to product,
depending on their nature.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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How To Invest
Ready To Get Started?
Four easy steps to investing in funds via CommSec:
1. Use our online tools to search for funds that match your goals.
2. Download the fund Product Disclosure Statement (PDS) from our website, or ring 13 15 20 for assistance, 8 am to 5 pm,
Sydney time, Monday to Friday.
3. When you have carefully read and considered the PDS and are ready to invest, complete out the application form in the PDS
and send it to the fund manager.
4. Complete the Fund Broker Nomination form & send it to CommSec.
Need Help Choosing A Fund?
The three key factors to consider when deciding whether a fund is right for you are:
1. Your investment objectives
2. Your investment time frame
3. Your investor profile
1. Your Investment Objectives
Everyone has different reasons for investing. Maybe you’re saving for a home deposit. Maybe you’re investing with your children’s
education in mind. Or maybe you’re looking forward to a comfortable retirement. Whatever your situation, you need a clear
understanding of your objectives before you can choose the right investment. Are you looking for capital growth, income, or a
balance of the two?
Different funds offer a different mix of growth and income; some funds also offer the potential for tax effective income. Here’s how
your investment objectives could influence your choice of fund.
Investing for growth
Investing for income
Balanced funds
Tax effective investing
If your goal is to create medium or long-term wealth, then you are likely to be a growth-oriented
investor. Growth funds typically invest in shares; property funds can also offer good prospects for
growth.
If your aim is to live entirely off your investments, supplement your income or service a loan, you
may be looking for an income fund. Income funds often have a high proportion of their capital
invested in assets such as fixed interest investments or property.
Balanced funds offer investors a mixture of income and capital growth. They are usually multisector
funds with a diversified portfolio ranging across the different asset classes.
Some funds may offer particular tax advantages. Australian share fund distributions may include
imputation credits, which may help you pay less tax on your investment income. Property trusts
may also receive tax concessions that may be passed on to you as tax-deferred and tax-free
income. Consult your tax adviser about the tax implications of a particular fund before investing.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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Matching Asset Classes To Your Objectives
Here’s an overview of the different investment outcomes you might expect from investing in different asset classes.
Asset class Income potential Growth potential Tax effectiveness Risk
Cash Low - - Low
Fixed interest High Low–Medium - Medium
Property High Medium Medium–High Medium
Australian shares Medium Medium–High Medium–High High
International shares Low High - High
Past performance is not a reliable indicator of future performance.
2. Your Investment Time Frame
Your investment time frame can be an important factor in deciding what kind of fund is best for you.
Growth assets, such as shares and property, have historically offered higher returns over the long term, but they have also been
more volatile over the short term. That can mean taking on more risk if you are a short-term investor. So, if you are investing for a
short-term goal, such as a holiday, you may prefer a fund with a lower risk profile.
On the other hand, if you are investing for a medium-term or long-term goal, such as retirement, you will have more time to ride
out short-term ups and downs, giving you the opportunity to benefit from the long-term growth potential of assets like shares
and property. That means you may be more likely to consider a fund with a greater proportion of growth assets. Of course, your
investment time frame is not the only thing to consider when making a decision.
The type of investments you make will also depend upon your appetite for risk, especially the risk of short-term loss. The fund
Product Disclosure Statement (PDS) will often specify a time frame during which the fund manager believes a particular investment
should be held — typically longer for higher risk assets, and shorter for lower risk assets.
3. Your Investor Profile
Your choice of fund will also be affected by your investor profile, which is a combination of factors — your investment experience,
your attitude to volatility, and your investment time frame.
CommSec has an online investor profile tool which helps you identify your personal investor profile, then find funds that match your
profile.
Making Regular Contributions
A proven technique to help grow your investment faster is to make regular contributions using an investment plan. Many funds have
a regular savings or investment facility that makes it easy to build an investment with regular contributions starting from as little as
$100 a month.
Dollar Cost Averaging
By using a regular investment plan, you can also take advantage of an investment strategy called dollar cost averaging. The
principle behind dollar cost averaging is simple. You invest the same amount each month. In the meantime, the fund’s unit price
fluctuates with the market value of its assets. When the unit price is lower, your investment buys more units; when it’s higher, your
investment buys fewer units. As a result, dollar cost averaging can help deliver a lower average entry price over time.
Borrowing To Invest In Managed Funds
Borrowing to invest, or gearing, gives you a wider range of investment opportunities and increases your potential returns. A
CommSec margin loan is a loan designed specifically for investing in shares or managed funds.
Monitoring Your Investment Portfolio
If you are a registered CommSec client, you’ll have access to our easy-to-use portfolio monitoring tool. You can use the portfolio
tool to track the current value of your investments, your profit or loss and your overall portfolio asset allocation.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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Fees And Charges
Fund Manager Fees
There are a number of different types of fees that may affect your fund investment. The most common are outlined below. To find
out about the fees that apply to a specific fund, search for the fund/s you want and refer to the fund PDS or the Fund Profile.
Contribution fee
Trailing commission
Adviser services fee
Management fees
Other fees
Most fund managers charge a contribution fee as a percentage of the amount invested. This fee is
deducted from the value of your initial investment so that you receive fewer units in the fund than
you otherwise would. And remember, if you invest through CommSec Direct Managed Funds, we’ll
rebate up to 100% of the normal contribution fee. CommSec’s Contribution Fee Savings Calculator
enables you to compare investments through Direct Managed Funds with investments via a fund
manager or financial adviser that may charge a contribution fee. A simple calculation shows the
impact contribution fees have on the initial value of your investment and the lost earnings from these
fees over the investment period.
The trailing commission is paid out of the fee the fund manager receives for investing and
administering client funds. It is a set percentage of the market value of your investment and is
determined by the fund manager.
Some fund managers make it possible for an ongoing or one-off adviser services fee to be charged
by the Dealer or Adviser. This fee is paid out of the balance of your fund monies and is a percentage
of the value of your investment. The fee is deducted from your account either as a one-off charge or
periodically by way of a redemption of units.
These include ongoing administration, investment management, expense recovery and other fees
charged by the fund manager. Ongoing fees are deducted from the value of the fund before the unit
price is calculated.
Other fees, such as switching fees, withdrawal fees and termination fees may also apply. These fees
and their terms may vary between fund managers.
How We Get Paid
CommSec Direct Managed Funds does not charge you directly for our service. Instead, when you invest through us we receive a
fee from the fund manager. The way we are paid depends on our arrangement with the fund manager, but we generally receive a
trailing commission paid by the fund manager from their management fee. To find out about the commissions we receive for a fund,
search for the fund/s you want and refer to the fund PDS or the Fund Profile.
Sometimes we will give you the opportunity to invest in structured investment products that may be priced differently from standard
managed and super funds offered through CommSec Direct Managed Funds. Any fees or charges will be outlined separately in
each offering.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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Free Newsletters
CommSec Direct Managed Funds provides regular educational and technical information about investing in managed funds and
structured products, as well as offering unique and exclusive investment opportunities.
Selector’s List
Subscribe online at funds.commsec.com.au
A half yearly managed funds publication packed full of informative articles on new opportunities, practical portfolio strategies and
innovative approaches to investment. Expert analysis on the economy and the top rated unit trusts, super, pension and multi-sector
funds as rated by Morningstar.
Funds Monthly Newsletter
Subscribe online at funds.commsec.com.au
A monthly e-newsletter from CommSec Direct Managed Funds designed to keep you informed on market conditions and
investment opportunities. It also brings you the latest featured managed funds and items of interest to help you manage your
portfolio.
Managed Funds and Structured Products Alerts
Subscribe online at funds.commsec.com.au
A regular email alert on all the latest managed funds and structured products information.
Contact Us
directfunds@commsec.com.au
13 15 20 (8am to 5pm, Sydney time)
www.commsec.info/managedfunds
Important Information
Commonwealth Securities Limited ABN 60 067 254 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124
AFSL 234945 and a participant of the ASX Group and the Sydney Futures Exchange.
This is general information only and has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason any individual
should, before acting on the information, consider the appropriateness of it having regard to your objectives, needs, financial and taxation situation and if necessary, seek appropriate
independent financial and taxation advice. If the advice relates to a particular financial product, you should obtain a Product Disclosure Statement (PDS) or prospectus relating to the product
and consider it before making any decision about whether to acquire the product. PDS’s are available from Commonwealth Securities at funds.commsec.com.au or by contacting 13 15 20.
Commonwealth Securities does not guarantee the performance of any fund or trust and makes no specific recommendation on funds or trusts included in any prospectus or offer document
on its website. Past performance is not indicative of future performance.
*For information on entry and adviser fees please see the relevant product disclosure statement for each fund available on the website at www.funds.commsec.com.au. All applications for a
CommSec Margin Loan are subject to the Commonwealth Bank’s credit approval process.
* Entry & contribution fees are usually rebated in the form of additional units. Ongoing fees and charges may apply. Please refer to the PDS of the provider for further information. All fees are
disclosed in either the PDS or via CommSec Direct Managed Funds website www.funds.commsec.com.au.
** Available to CommSec registered clients only.
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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Nominate CommSec as your Fund Broker
Choose to invest in over 1,000 Managed Funds via CommSec and receive up to 100%
rebate on entry fees and regular contributions. You’ll pay no transfer fees when you
nominate CommSec as your Fund Broker, and the transfer process is simple.
To nominate CommSec as your Fund Broker, complete and return this form by:
Fax 02 8223 7160 | Scan and email directfunds@commsec.com.au | Mail Locked Bag 22, Australia Square NSW 1215
Personal details
Name
Street Address
Suburb State Postcode
Phone
Mobile
Email
New or existing investments to be transferred to CommSec
(Please complete a separate form for each Fund Manager)
Please note: CommSec can only be nominated as your Fund Broker for Funds available on funds.commsec.com.au
Fund Manager Name
Fund Account Number Fund name Estimated
Investment
Amount
$
$
$
$
$
Regular
Savings Plan
(Y/N)
Estimated or
New
Investment
(E/N)
Please sign and date
Signature Date DD/MM/YY
Important information: Commonwealth Securities Limited ABN 60 067 254 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of
Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a participant of the ASX Group and the Sydney Futures Exchange.
This is general information only and has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason any individual
should, before acting on the information, consider the appropriateness of it having regard to your objectives, needs, financial and taxation situation and if necessary, seek appropriate
independent financial and taxation advice. If the advice relates to a particular financial product, you should obtain a Product Disclosure Statement (PDS) or prospectus relating to the product
and consider it before making any decision about whether to acquire the product. PDS’s are available from Commonwealth Securities at
funds.commsec.com.au or by contacting 13 15 20.
Commonwealth Securities does not guarantee the performance of any fund or trust and makes no specific recommendation on funds or trusts included in any
prospectus or offer document on its website. Past performance is not indicative of future performance
CommSec Direct Managed Funds | www.commsec.info/managedfunds
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