Commonwealth Securities Limited

Managed and superannuation funds

Start a Managed Funds Portfolio

A managed fund is a professionally managed investment portfolio that individual investors can buy into, purchasing units rather than shares. Each fund has an investment objective, usually based around different asset classes (cash, fixed interest, property, shares and alternative assets).

Advantages of Managed Funds

Managed Funds have a number of advantages over shares and other investments, these are:

Your money is managed by professionals so you don’t have to worry about doing the research and picking stocks
It’s easy to diversify your money across a number of investments, especially if you’re starting with relatively small sums (from $1,000)
You can invest to achieve income, capital growth or both
You can easily set up an investment plan and make regular contributions

What to consider when investing

Before choosing your investments there are a number of things you need to think about:

How much money do you have to invest?
Why are you investing and what do you want to achieve?
What is your investment timeframe?
Your risk profile – ie how much risk are you prepared to accept to achieve your desired return. It’s generally accepted that the higher the potential investment return, the more volatile an investment will be, and the higher the risk that you will lose some or all of your money. And how you feel about risk will affect the types of investments (also referred to as asset classes – cash, shares, property and alternative assets) you’ll be interested in.

To start investing in Managed Funds

Go to Find Funds and select your Investment Type
Select the Fund that applies to you
View Fund information and request a PDS

You can also add Funds to a shortlist and compare Fund returns and Morningstar ratings.

How to choose a fund

There are a number of ways to categorise funds:

By type of investment – Ordinary investment, superannuation or pension/retirement fund. The differences between them are basically down to the way they’re taxed.
By asset class - Generally, funds fall into two categories – single sector and multi-sector funds. Single sector funds invest in just one asset class. Multi-sector funds invest in more than one asset class and are often referred to as Balanced or Diversified Funds.

Another thing to look out for when choosing a fund is the different management styles – passive (eg index funds), actively managed (trying to beat an index or benchmark), growth (focussing on companies that will increase in value), value (focussing on companies that are undervalued), GARP (covering both growth and value styles) and style neutral (no particular style but aiming to avoid investment extremes).

One way to compare similar types of funds is to look at their Morningstar ratings. These ratings are based on a fund’s performance over the previous three years. You do need to remember that past performance is no indication of future performance.

Borrowing to invest/Gearing

Borrowing to invest, also referred to as gearing or leveraging, can help increase your potential investment returns. Gearing into managed funds helps you put the same principle to work and you may be able to claim the costs of investing (set up fees, loan interest etc) against your investment earnings (distributions) when you complete your tax return.

Just as borrowing to invest can multiply your potential returns when you invest successfully, it can also increase your losses if your investment falls in value.

Visit our Margin Lending page for more about borrowing to invest.

What is superannuation?

Super is a way to help you save for your retirement. For most people, super begins when you start work and your employer starts paying super for you (currently 9% of your salary). These payments are known as super guarantee contributions or concessional (before-tax) contributions.

How does it work?

One of the great things about super is that all contributions, income earned and capital gains are taxed at 15% rather than at your personal tax rate (as high as 45% excluding medicare and the temporary flood levy). The trade-off is that you can’t touch any of the money until you retire, other than under exceptional circumstances. After age 60, income on your super is usually tax free and you don’t pay tax when you receive a pension.

One thing to be aware of is that there are very strict limits as to how much you can invest into super, so it’s best to check on the ATO website.

Track down lost super using the ATO SuperSeeker tool

Use the CFS calculator to determine how much super is required for retirement.

Investing into super

You can invest into super through many of the managed funds available on this website via the Find A Fund tool. The large public superannuation funds take care of all the trustee and compliance responsibilities and allow you to access the reduced tax rates (15%) on contributions and income.

Most super funds and platforms include a number of different investment options for you to choose from and which can allow you to tailor your super strategy to your own needs (eg risk profile, timeframe etc).

Investing in super is easy, accessible and affordable through CommSec. To start investing go to Find Funds and select your Investment Type.

Pensions

Retirement and receiving a pension from your super

There are options available both in the years leading up to retirement and when you fully retire from the workforce.

Approaching retirement:

‘Transition to retirement (TTR) – the government allows you to keep working and receive a pension, which you can use to reduce your working hours.
You may also consider salary sacrificing into your super as part of your transition to retirement. This can be very tax-effective.

Permanent retirement:

You can consolidate your super funds and start an account-based pension (previously referred to as an allocated pension) that you can start to live off.

A convenient way to do this is generally to roll some or all of your superannuation savings into a pension fund.

To start investing go to Find Funds and select your Investment Type

What is a platform?

A platform is an administration service that allows you to invest in a variety of investment products, across a number of product providers via one consolidated service.

Platforms offer a broad range of investment choices, all in the same convenient location. It’s a bit like a department store, where you can choose from different brand names and products, making it easier for you to make all your purchases in the one place rather than opening accounts with each of the product providers.

What platforms can offer

You can access Wholesale funds through CommSec at an initial minimum investment of between $1,000 to $5,000 depending on the Platform, compared to a typically higher initial investment amount if you invest directly through the Fund Manager.
Consolidated reporting – no matter how many funds and fund managers you have in your portfolio, all your information will be in a single report.
No switching fees – it’s easy and inexpensive to change your investments within the platform.
A large range of investment choices and fund managers
In the case of superannuation platforms, this fee covers the necessary trustee and compliance services.

*Platforms charge an administration fee for the above benefits, in addition to the management fees charged for the different managed funds offered by the platform.

Platforms available through CommSec

To search for platform funds go to Find Funds and search by platform.

Investments	Superannuation	Pension
BT Investments	BT Lifetime Personal Super	Colonial First State FirstChoice Pension
Colonial First State FirstChoice Investments	Colonial First State FirstChoice Super	OnePath OneAnswer Pension
MLC MasterKey Investment Service	MLC MasterKey Super	Perpetual WealthFocus Pension Plan
OnePath OneAnswer Investment Portfolio	OnePath OneAnswer Personal Super	Zurich Account Based Pension
Perpetual WealthFocus Investment Advantage	Perpetual WealthFocus Super Plan
Perpetual WealthFocus Investment Funds	Zurich Superannuation Plan

What will it cost to invest in managed funds?

Fees are generally categorised as entry, ongoing and exit fees. But it’s a good idea to look at the big picture – generally funds will quote performance AFTER fees. So rather than just looking at the fee you need to consider if the fund performance justifies the fees.

Managed Funds Costs

Fees	Amount
Entry fees	Entry or Contribution fees are typically around 4%. CommSec Direct Funds will rebate up to 100% of the upfront fees depending on the fund.
Ongoing fees	The ongoing fee is generally referred to as an Indirect Cost Ratio (ICR) or Management Expense Ratio (MER). The ICR is made up of the annual fees charged to you by the fund manager. ICRs for funds listed on CommSec vary and can be anything from 0.22% to 3.98% depending on the type of fund. The MER represents most of the fees charged by a fund manager for operating a fund. It is expressed as a percentage per annum and was the main method for calculating fees prior to 1 July 2006.
Transaction fees (ie buy/sell spread)	Most managed funds charge transaction fees when investors make or redeem investments. These fees generally range from 0.2% to 0.6%, depending on the fund selected. They are usually charged on both entry and exit and cover the fund manager’s transaction costs such as brokerage and stamp duty.
Exit fees	Exit fees are charged in some cases where a fund manager seeks to get back specific costs they incur when you withdraw your investment. These are fees that are debited as a dollar amount from your investment (as distinct from transaction fees mentioned above, which are deducted from the unit price).
Other fees	Performance fees are sometimes charged for funds that aim to outperform benchmarks. You should check the Product Disclosure Statement for the fund you’re interested in to find out more.

Platforms Costs

Fees	Amount
Entry fees	Investors can expect to pay an entry fee on funds within a platform, typically 4%. CommSec Direct Funds will rebate up to 100% of the upfront fees depending on the platform.
Ongoing fees	Ongoing fees are represented as the ICR for each investment option in the platform. This ICR includes:an ongoing administration fee for using the platform. This fee covers the cost of holding the investments on your behalf, consolidated reporting and online access to your portfolio. investment management fees are charged for each investment option by the underlying fund manager.
Transaction fees (ie buy/sell spread)	Transaction fees are charged when investors make or redeem investments within the platform. These fees are quoted in the form of a buy–sell spread and range from 0.2% to 0.6% depending on the fund selected. They are charged on both entry and exit.

The information on this site has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

You should also read our Financial Services Guide (FSG), which provides you with information about us and services we can provide.