Best low-fee managed funds found: survey

Investors in managed funds need to pay more attention to the array of upfront and ongoing fees and learn how to best negotiate them down, according to new research.

Canstar Cannex has just completed its first review of managed funds in which it compared funds based on their appropriateness for certain life stages of investors.

It compared over 150 large-cap and small-cap managed investment funds based on their suitability for seasoned investors looking for diversification, those starting out looking to accumulate wealth and those looking to supplement their regular income.

Some of the top performers for each category included BT’s Smaller Companies Fund, Celeste’s Australian Small Companies Fund, Aberdeen’s Australian Equities Fund, the All Star IAM Australian Share Fund, and the BlackRock P Inv Australian Share Fund.

Canstar Cannex head of research Steve Mickenbecker said the research took into account all types of fees associated with funds and set these out in an easily digestible format for ordinary investors.

“There are contribution fees, adviser fees, administration fees, platform fees, buy spreads, sell spreads, switching fees, termination fees, and lastly, a performance fee,” he said.

“You might hear the argument that investors don’t care about fees if they are getting good returns and that is true. But, as we know, there are no guarantees.”

Mickenbecker said in order to reduce fees, retail investors could go through a financial planner where they could negotiate down fees, use a discount broker where they could receive a 100 per cent rebate on the upfront contribution fees, or negotiate fees directly with fund managers.