Category: Fees

It was the best of times … it was the worst of times – January 2026 End of Month Update

Author of ‘A Tale of Two Cities’, Charles Dickens in his study at Gadshill

Slack Investor is a bit of a do-it-yourself bloke and has had reasonable success with his investing over the long-term. However, there is a place for outsourcing this noble task and it has always been Slack Investor’s intention to gradually take a back seat as he loses his faculties and hands over the whole kaboose to Ms Slack Investor. I always thought I would follow the great Mr Buffet’s thoughts on how to produce superior returns to most fund managers.

‘My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.’ – Warren Buffet, 2013 Berkshire Newsletter

Warren Buffet’s reasoning is based upon the relatively high fees that stock-picker (active) funds charge. It is his contention that these fees will erode any achieved outperformance for most of them. Is there still room for stock-pickers? With apologies to Charles Dickens, Slack Investor will examine this with a Tale of Two Funds from his own investing history.

The Tale of Two Funds

The Montgomery Fund

Slack Investor has always been impressed with Roger Montgomery. He often appears on the media and his own website with reasoned and intelligent comment. It was after one of these exposures that Slack Investor thought it would be a grand idea to allocate some of the Slack Funds to Montgomery’s signature vehicle. Slack Investor bought units in The Montgomery Fund. between 2012 and 2017. While there was some initial success, the continual long-term underperformance when compared to the ASX 300 Benchmark was enough for Slack investor to have misgivings – and pull the sell cord in 2020 for an eventual loss. It was a case of the ‘sizzle’ being more impressive than the steak.

The management fees for the Montgomery Fund start at 1.36%p.a. and there is also an outperformance fee of 15.3%. The table below shows that in all time frames, but most significantly, when using the long-term figures (> 5-yr), the Montgomery Fund has underperformed. The fund has been weighed down by its relatively high fees and poor performance. The fund is aware of its chronic underperformance and they attribute most of the blame to an old fund manager prior to 2022. However, the inability to keep pace with the benchmark even in the last 3 years, suggests to Slack Investor that the malaise still lingers.

Table of the Montgomery Fund performance vs S&P/ASX 300 benchmark till 31/12/2025 since since inception 17/08/2012 – The Montgomery Fund

PM Capital Global Opportunities Fund

PM Capital Banner

Slack Investor’s ears pricked up during a Livewire Interview with Paul Moore, the founder of PM Capital. Mr Moore’s humility, common sense and experience came through when discussing his fund offerings. PM Capital run a number of different funds but the one that intrigued Slack Investor the most was the Global Opportunities Fund where:

The aim is to create long term wealth through a concentrated portfolio of 25-45 global companies that we believe are trading at prices different to their intrinsic values.

The PM Capital Global Opportunities Fund is available as a Managed Fund and also a Listed Investment Company (LIC). Slack Investor chose the LIC (PGF.ASX) as it is readily traded through his broker. PGF has fees of 1.0% p..a. and there are also an outperformance fee of 15%. However, looking at the intrinsic value of global companies is a skill that Slack Investor hasn’t got. For example, the largest position in PGF is European banks. PM Capital compare the Dutch origin ING (Book Value x 0.8, Forward PE 5) with Australia’s CBA (Book Value x 2.0, Forward PE 19). Slack Investor is happy to pay a fee to portfolio managers that are willing to seek out good value global companies. The long-term outperformance in the table below confirm that they are excellent at it!

Performance Table for the PM Capital Global Opportunities Fund, the Monthly update figures valid at 31/12/2025 were used together with the MSCI World Index returns in Australian Dollars (AUD). The PGF ETF was launched in December 2006 but the Fund’s inception date was October 1998.

This is not advice, and Slack Investor acknowledges that past performance does not guarantee future performance. However, the table above suggests that Mr Moore and his team know what they are doing. Consistently outperforming the MSCI World Index (in $AUD) is a considerable accomplishment. Slack Investor has bought some PGF with thoughts of adding further to his position in the future.

January 2026 – End of Month Update

End of month updates - Blue rising chart

Slack Investor remains IN for Australian index shares, the US Index S&P 500 and the FTSE 100.

In another crazy month of world turmoil (Thanks Mr President!) all followed markets rose strongly. The S&P 500 (+1.4%), the FTSE 100 (+2.9%) and the ASX 200 rose +1.8%. Slack Investor remains uneasy about how this great experiment will work out.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

Small Things

Slack Investor is enjoying the hallmarks of the festive season and has collected a ‘grab bag’ of smaller finance issues that just wouldn’t make a whole post. So, here they are as a collection.

Revised Division 296 Super Tax

Slack Investor wasn’t the only one going on a bit of a rant about the poor design of the proposed tax on large super balances – Division 296.

There was an unusual change of heart within the government after many months of stonewalling. The Division 296 proposal to tax both ‘realised’ and ‘unrealised’ gains on superannuation balances over $3m was finally revamped. The Australian treasurer Jim Chalmers relented. The new revisions are not law yet and are expected to be presented, and passed, in early 2026 with an implementation date of 1 July 2026. The changes from treasury outlined below are practical and sensible – and include indexation on the balance limits.

  • Superannuation earnings attributable to balances between $3 million and $10 million will be taxed at an effective rate of 30% (i.e. the existing 15% rate plus the additional 15% Division 296 charge).
  • Earnings attributable to balances above $10 million will face a 40% rate.

Slack Investor sees this as a welcome change of heart and a testament to the many persistent voices in the superannuation community that pointed out the flaws in the initial proposal. It is not often that Slack Investor is pleasantly surprised by a proposed tax outcome.

Yes, the S&P 500 is currently expensive

Slack Investor is a fan of using the forward adjusted S&P 500 Price/Earnings ratio (CAPE) to evaluate market value. Another way of looking at how expensive the S&P 500 is currently – is through a whole market yield analysis. When the overall market yield is high, this indicates that the market is cheap, lower yield (dividend) values represent an expensive market.

Gurufocus

The median dividend yield value for the S&P 500 is 2.83%. The Mid-December 2025 value is 1.14%. This is approaching the lowest point in the 60 years that the chart represents.

Payday Loan Sharks

Slack Investor’s pre-Christmas bliss was interrupted by a cheery ad on SBS offering a loan from Cash Converters … with no fees!

I thought this was very decent of the Cash Converter’s crowd to help out this way – because in finance world we are always trying to reduce our fees and transaction costs. A search down to the details revealed that, sure, there were ‘no fees’ but there was an ongoing interest charge of 48% on amounts owing!

Interest is charged at a fixed rate of 48% per annum on the total outstanding balance – Cash Converters

Admittedly, these loans are unsecured but in an environment where the comparison rates for various products are typically:

  • Home Loan: 4.8% – 6.5%
  • Personal Loan: 5.8% – 22%
  • Credit Card: 8.0% – 22%

These interest rates would seem outrageous! ‘Cashies’ are not alone in this space with the heavily advertised Wallet Wizard offering a 47.8 % loan interest and Nimble puts the screws in for 47.6%. There are many other harmless sounding short term loan providers with similar products, e.g. Swoosh, Sunshine, CashTrain, etc.

Slack Investor knows that there is a market for these payday loans to help manage unexpected bills and was glad that there is some form of regulation of this sector through ASIC. There was a big push to introduce protections in 2013 but these regulations applied specifically to loans less than $2000. Further regulations were introduced in 2022.

However, it is time to sharpen the ASIC regulation again, and with a few more teeth. Payday lenders are now pushing punters into the less regulated area of loans greater than $2000.

In the meantime, if you are in desperate need of cash in a hurry – try to avoid these payday loan sharks and apply for no interest loans through a charitable organisation like Good Shepherd. To get out of a debt trap you often need help and government-funded debt counsellors can provide this.

For an entertaining comedy/drama on Payday Lenders, Bank of Dave 2: The Loan Ranger is recommended – based on a true story (Netflix). Slack Investor offers festive greetings to all.

The Minutia of Investing – Portfolio Tracking and Tax Reporting

Slack Investor has just finished the inputs for his family tax returns and our SMSF tax return. All Good – and he was pleased that it was a painless procedure. After many years of investing, he has got himself organized.

A lot of the tax-time pain has been erased because of his disciplined rituals. As soon as he gets a communication about his shares (usually email) it is downloaded to one of Slack Investor’s Finance folders on his PC. The Finance folder has two sub-folders one for Transactions (Buy/Sell contract notes from Brokers) and, another for communications from Share Registries labelled DIVIDENDS_TaxStatements. He then saves items in these folders with specific notation Account_StockSymbol_Type of document_Date of issue (YYYY-MM-DD). For Tax Statements, Slack Investor will allocate the date for the end of tax year that the statement covered. After completing tax returns, Slack Investor will archive the files to the folder for the previous tax year – and start again for the current year.

Slack Investor’s Portfolio Tracking

Microsoft Money Sunset

Slack Investor will also enter any transactions or income events into his portfolio tracking software. He uses the retired but excellent (and free) ‘Sunset’ International English version of Microsoft Money downloaded from Gareth J. M. Saunders site. There is also a UK Version, and a US Version.

To automate share price updates it is necessary to use a service like  MSMoneyQuotes. The latter is not freeware but the $US10 lifetime licence is money well spent. MS Money is now a 20-yr old bit of software and is a bit clunky but there is a good installation guide at TechFinitive that will help you through – including some registry changes to work with windows 10/11. Slack Investor loves MS Money, and the many support sites, e.g. View from the Potting Shed which has a free support pdf available, Ameridan’s Blog and moneymvps.org. He has been using versions of MS Money for 30 years!

For those who don’t want to wander through the complications of the Microsoft Money path, it is really important to track your portfolio for capital gains and performance, and at least some sort of portfolio tracking is recommended. Slack Investor cannot stress this enough. The ATO will want information when you sell stocks. They require your sell date and price, and the harder to find, buy date and initial cost of your shares/ETF’s – in order to calculate any capital gains tax. This procedure can get complicated when you buy shares in different lots or, participate in a dividend re-investment program as the ATO require a cost-basis for each parcel. It will make your life easier if you have a portfolio manager or, at least, a capital gains tracker.

Portfolio Tracking with Monthly Fees

For Australians, the slickest products involve an annual/monthly cost as good financial software requires constant development.

Sharesight

A highly-rated financial portfolio tracker that includes tax statements and capital gains tracking for $228 annually for one portfolio or $348 annually for up to 4 portfolios. Sharesight used to have a free version that included tax reporting for one portfolio with under 10 shares. However, they have now dropped tax reporting privileges for free accounts.

Navexa

Another nice looking and highly-rated product. A financial portfolio tracker that includes tax statements and capital gains tracking for $240 annually for one portfolio or $300 annually for up to 3 portfolios.

Snowball

This is a US-based portfolio tracker so it will not help greatly with your Australian tax reporting. However, it is a highly-rated and a good looking way to track your Australian and US shares for around $130 AUD annually for one portfolio or $230 AUD annually for up to 10 portfolios.

Finance Tracking without Monthly Fees

Down at the budget end we have products that require a bit more work. There are a few other alternative finance products that are discussed in Whirlpool – but Slack Investor presents a few solutions below.

Yahoo Finance

This is a very basic tracker that can track your overall portfolio performance if you enter your buys and sells and dividends manually. Slack Investor uses Yahoo Finance to keep an eye on the day to day movements of his portfolio plus watchlists. There is no tax reporting or help with capital gains, but Yahoo Finance is a free portal to track your portfolio and it will have your buy and sell information in one place.

Stock Profit

An excellent free alternative to portfolio tracking is the google sheets based Stock Profit. There is a bit of a effort in setting it up but it will track your performance and capital gains with ease. This really is a good product.

Capital Gains Tracker

If you are not worried about portfolio tracking you will make your life easier at tax time if you have some means of tracking capital gains and the free web-based but locally stored cgtracker will supply you with capital gains information and tax statements. Capital Gains Tracker is free to use but you must enter all your buy/sell information.

Personal taxes and Mytax

Firstly, a ‘Hats Off’ to the ATO who have made their online tax returns (MyTax) a very simple process with the ‘pre-filling’ of wages, dividends and distributions. Slack Investor usually waits till September to allow all the pre-filling documents time to trickle in to the ATO. It is now incredibly easy to fill in a tax return yourself and only those with very complex tax affairs should need an accountant.

If your tax affairs are relatively straightforward, MyTax is a fast, free and effective way to lodge your return online. It puts control in your hands, provides instant access to pre-filled information, and helps you get your refund sooner. – Tax Window

By September, all of Slack Investor’s personal tax information was pre-filled, including the distributions from ETF’s that often have internal capital gains and foreign income. He had additional capital gains from share selling and opted to use their Capital Gains Worksheet which was part of MyTax – it already had the small ETF internal capital gains prefilled and he just had to add buy dates and costs for each lot of shares sold. Slack Investor had all of this information on MS Money – but any capital gains tracker would have this information in one place. For advice on any problems with MyTax, he went to the ATO community rather than the official ATO site – which often has opaque, or vague, solutions to your problems.

SMSF Tax Return

Slack Investor started the process in October when his provider (Esuperfund) prompted him to allocate categories to each of the transactions for his SMSF Bank account. All the dividends and distributions were pre-filled but he needed to label the type of contributions (concessional/non-concessional) and the relevant member of the SMSF. Also, he had to determine from which pension account any withdrawals came from. There was some head scratching to make sure the minimum amount withdrawal requirement (5% age 65–74, 4% age under 65) from each pension account had been fulfilled.

Slack Investor had to assure Esuperfund that he hadn’t bought any exotic assets outside of their monitored banks/brokers. He also had to upload Tax Statements from each of the ETF’s in the SMSF portfolio. Luckily, they were all in one place in my Dividends_Tax Statements folder. He submitted the checklist and now have to wait a long ~7 months – till May 2026. By which time, Esuperfund will have obtained an Auditor’s review and will present the trustees with the 2025 SMSF Tax Return to sign.

Growth Professionals … and June 2025 – End of Month Update

Slack Investor has a healthy regard for those who make a living based upon their performance. It is a general financial wisdom that, if you are following large companies, you will very probably be better off in the long term with passive index funds.

Percentage of active funds that underperform (orange) over a 15-yr period – Spiva

However, some active boutique stock pickers may have an advantage when it comes to smaller international companies. In this category, 33.65% of active funds are able to outperform over a 15-yr period.

Slack Investor is currently backing his own abilities on the stock picking front. But, there will come a time when I lack the ability or inclination to do the (admittedly limited) research work. Also, there are some Slack Investor readers who would like to outsource this task.

Hyperion Global Growth Companies Fund ETF (ASX: HYGG)

I don’t follow individual companies in overseas markets that closely – but there are those that do – and do it very well.

Hyperion are Brisbane-based and started this managed fund back in 2014. They have also offered access as a listed ETF on the ASX since 2021. The ETF would be the way that I would buy it.

HYGG is not a low-cost fund as it has a Management Expense Ratio of 0.70% and an outperformance fee of 20% against benchmarks. The ETF, to date, has not paid a dividend. However, in this case, it seems that the managers are offering good value net of fees.

Growth of the Hyperion Global Growth Companies Fund after fees and costs have been extracted since 2014 – Hyperion

One-year performance (2024 May +47.3%) is impressive. However, Slack Investor is after the real grafters who can produce impressive results over the long-term. Hyperion is establishing a case for consideration.

5 and 10 year Performance of HYGG – net of fees – Hyperion

The advantage of an active fund manager is that they can be nimble and take advantage of any opportunities that the Hyperion analysts discover.

Holdings% Portfolio Weight1-Year ReturnForward P/E
Tesla Inc12.2965.9166.67
ServiceNow Inc9.4234.1660.98
Microsoft Corp7.9510.7333.11
Palantir Technologies Inc Ordinary Shares – Class A7.65498.55263.16
ASML Holding NV ADR7.15-20.8128.74
Spotify Technology SA7.1143.2671.43
Amazon.com Inc712.1433.67
Block Inc Class A5.722.8817.73
Meta Platforms Inc Class A4.6141.928.65

Table of the top holdings of HYGG, their portfolio weight, 1-yr return, and forward PE at May 2025.

When it is time to really ‘get on the couch’, Slack Investor would take a look at these blokes to invest his money. This Hyperion crowd seem to know what they are doing.

June 2025 – End of Month Update

The financial year closes and the Australian, UK and US markets are all in positive territory for the financial year.

Slack Investor remains IN for all followed markets. The ASX 200 (+1.3%) and FTSE 100 (-0.1%) moved modestly. It is a continuation of good times in the US with the S&P 500 rising 5.0%. Are our American friends delusional in an expensive US market? Or, is Slack Investor missing something.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index). The quarterly updates to the Slack Portfolio have also been completed.

Tinkering with the Portfolio Part 1 – and January 2025 – End of Month Update

(Image Source – Cademix)

In the middle of 2024, Slack Investor had some cash from the sale of Altium (ALU) that needed investing. He had spread the amount into buying into some companies that he already had (TNE, CAR, SNL, NDQ, PME, TLX). He also brought in some new blood (WEB, MP1, NCK, RMD, JNDQ, BOT, RUL, DHHF). The new companies were picked because he hoped that they were in the ‘growing stage’ – to replace the growth superstar ALU.

As with most things, some have worked well – and some not so well. The real duds were associated with Webjet (WEB) and its subsequent spin-offs. He also dumped his small holding of Megaport (MP1) – but, he is now having a rethink about MP1. As the Slack Portfolio is fully invested at the moment, to buy something, he must first sell something.

BetaShares Diversified All Growth ETF (DHHF)

This was the last thing that Slack Investor bought on his 2024 buying spree and, to be honest, he didn’t look to0 deeply into it. Slack Investor was initially impressed by the simplicity of an All Growth ETF at a low management fee (0.19%). DHHF has done very well since purchase (+11%). The ETF is certainly diversified but, he is wondering whether the All Growth, as it says on the label, means that it is growing.

DHHF is a bundle of four low cost funds. The funds are:

The percentage allocation, on 24/01/2024, with the Management Expense Ratio (MER) of the underlying funds is shown below. Betashares have done a good job to ensure the underlying funds have very low fees (MER).

ETF% AllocationMER (%)
VTI42.00.03
A20037.10.04
SPDW15.00.03
SPEM5.70.07

Slack Investor must admit to a misunderstanding when he bought DHHF – he thought All Growth meant he was buying a selection of growing companies. It is only when he read the accompanying Product Disclosure Statement that he realised that All Growth was in reference to the fund being almost 100% in growth assets (shares or property). They are using All Growth as a descriptor to investing style. The All Growth assets make this fund suitable for those who have a high tolerance for risk. Betashares recommend a holding period of at least 7 years.

Does Growth mean Growing?

Not necessarily. This can be confusing – it was for Slack Investor! He has been guilty of using these terms interchangeably. Growth can be used as an investment style description – indicating the asset mix and amount of risk. The more shares and property in the mix, the higher the risk (chance of negative returns). According to Investsmart, typical mixes for funds are:

  • High Growth: around 100% in shares or property.
  • Growth: around 85% in shares or property, and 15% in fixed interest or cash.
  • Balanced: around 70% in shares or property, and 30% in fixed interest and cash.
  • Conservative: around 30% in shares and property, and 70% in fixed interest and cash.
  • Cash: 100% in bank deposits or ‘capital guaranteed’ products.

Of course, Slack Investor should have fully read the DHHF PDS before his purchase – a rookie error! Because he also has a stable income portfolio, the ‘riskiness’ of DHHF didn’t bother Slack Investor. However, his favourite companies to fill the Slack Portfolio are those that are having earnings that are actually growing or, are projected to grow, at least 10%.

A big portion of DHHF consists of the ASX 200 (37.1%). Slack Investor owns a small holding of the Australian Index and, he acknowledges that it is a fantastic part of any income portfolio – as it is a great source of dividend imputation income. However, he has never really been a big fan of the ASX 200 in the growth-based (or, should I say, growing-based) Slack Portfolio.

The ASX 200 is a mixture of ‘Duds’ (shrinking companies, decreasing earnings), mature companies (companies in steady state – earning but not really growing) and, companies that are increasing earnings and actually growing.

In the ASX 200, seven of the top ten holdings are either banks or mining companies – these types of companies are not known for growing every year at above 10%. For example, the top ASX 200 holding is the Commonwealth Bank (CBA). According to the Market Screener site, CBA’s 2024 Earnings Per Share (EPS) growth was -4%. For 2025 and 2026, growth is projected to be 5% and then 4% p.a.

Slack Investor rates Betashares DHHF to be an excellent ETF for diversified share exposure at a relatively cheap cost. It definitely qualifies as High Growth as it consists of nearly 100% in shares or property. However, Slack Investor would rather concentrate on companies that are actually growing. He will sell DHHF and use the cash to buy something else.

January 2025 – End of month update

Slack Investor is IN for Australian index shares, the US Index S&P 500 and the FTSE 100.

The new year has started well, particularly for the UK and Australia where, the FTSE 100 is up 6.1 %, and the ASX 200 up 4.6% in January.

The S&P 500 (+2.7%) is relatively subdued after the monster 25% gains of 2024.

All Index pages and charts have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

The World According to GARP ETF

Slack Investor has never seen the film, though well reviewed, but he did struggle through the complex book by John Irving in the late eighties. His interest in GARP has been rekindled by a new ‘Smart Beta’ ETF that has been floated by Global X in October 2024. This one is fresh!

Smart Beta refers to an enhanced indexing strategy that seeks to exploit certain performance factors in an attempt to outperform a benchmark index – Fidelity

This is good … is it possible to get the benefits of passive investing with some of the advantages of active investing strategies? Can you have low fees with better performance than benchmarks? Perhaps all the hard work in selecting growth stocks can be done with a financial selection algorithm and Slack Investor can get back to the couch.

Global X S&P World ex Australia GARP ETF

Exposure to companies with robust earnings growth and solid financial strength trading at reasonable valuations – Global X S&P World ex Australia GARP ETF

Growth at A Reasonable Price (GARP) … in an ETF … am I dreaming? Is this too good to be true? Ahh … there is a management fee. But, it’s 0.3%. Not bad for a fund that has some selection smarts plus international exposure. There is a lot to like about this ETF.

Selection Process for GARP ETF

The GARP ETF tracks the S&P WORLD EX-AUSTRALIA GARP INDEX using a rules based stock section process. From the global shares universe, all companies are assigned a Growth score for their previous 3-yr growth. Then there is a Quality score that combines company assets to debt ratio, return on equity (ROE), and the earnings to price ratio (Inverse of P/E Ratio).

Once the ranking is complete, shares are selected that score highly in both categories and some restrictions on exposure to individual shares and sectors is applied – Mark LaMonica, Morningstar

So, by weeding out some of the companies that are ‘unreasonably’ priced the top 250 global companies are selected according to GARP principles. The price (P/E Ratio) filter should help mitigate the portfolio downside in a market downturn.

Performance

The GARP ASX ETF has only been running a month but Morningstar has gathered some data based upon the GARP principles over time.

GARP seems to perform better than the S&P 500 in some time frames, particularly in the periods that include a share crash. The 5-yr period includes the 2020 ‘Covid Crash’ and, the 20-yr frame includes the  2007–2008 financial crisis (GFC). But these are just index values – without fees. When you factor in the GARP management fee of 0.3% compared to the iShares S&P 500 ETF (IVV.ASX) fees of 0.04%, the outperformance of GARP does not look as good.

Top 15 Holdings GARP

GlobalX GARP ETF top 15 holdings

There are a lot of tech companies in here but also some consumer discretionary stocks. Some of the more expensive (high P/E ratios) tech companies must have been filtered out by the GARP process. It is only when Slack Investor takes a closer look at these companies that he starts to get ‘cold feet’. Overall, Slack Investor thinks this is a good package to get exposure to reasonably priced growth companies. Two things that hinder Slack Investor from investing are :

  1. The overlap in holdings to some of the ETF’s that he already owns. e.g. Betashares Nasdaq 100 ETF (NDQ.ASX) and Betashares Global Quality Leaders ETF (QLTY.ASX) – a purchase of this ETF would not really add to the diversity of his share ownership
  2. In the the top 15 holdings, there are 3 Petrochemical companies – Exxon, Chevron and Shell.

Slack Investor will admit to some hypocrisy here. He owns a 15-yr old petrol driven car and regularly uses jet fuel to get to far away places. On the plus side, his roof is making renewable energy. However, the world is getting hotter and he’s aware that we must continue to work toward phasing out the use of fossil fuels. Are you listening Donald?

Slack Investor is a part owner of all types of companies through index and broad market ETF’s (e.g. VGS, STW, S&P 500 Index, etc). However, he has a ‘piddly’ moral stance of trying not to bundle into the Slack Portfolio any ETF’s that actively select higher proportions of Tobacco, Gambling or Fossil Fuel companies.

Is this making a better world? Probably not. But, leave Slack Investor alone to pursue his token activism – no harm done. Besides, it’s likely to be better than doing nothing. This is a personal thing and, Slack Investor encourages all investors to take on any sort of investment stance that feels right for them – providing it is profitable in the long term.

Auto-Diversification … and September 2024 – End of Month Update

Slack Investor tries to be a little diversified in his investing with his Three Pile Theory. Although my Investment Pile (The Slack Fund) consists mostly of Australian and International Shares, my Stable Pile (about 30% of retirement funds) consists of annuities, Real Estate ETFs, Fixed Interest products, some high dividend paying shares and some Cash. I own no bonds, Gold or Cryptocurrency. I am not very strict about rebalancing … but, that’s because I am slack! Deep down however, I’m convinced that diversification makes good financial sense.

A quick look at the yearly Vanguard diversification table below shows the percentage annual total returns for 9 different asset classes. I have only shown the last 17 years, but the 30-yr table can be found here in .pdf form.

Total returns for each asset class for the 30 years since 1992 – Check out the full 30-yr glory of the Vanguard 2024 – Importance of Diversification.pdf – Click this chart for better resolution.

For financial year 2024, the best performers were: Australian listed property returned 24.6%, US shares 24.1% and hedged ($AU) International shares 21.5%. The point of the Vanguard table is to highlight that it is very hard to try and predict the yearly winner. Slack Investor notes that International shares (particularly the US) have featured in the top 3 for a lot of these last 17 years. He also notes that Cash is a rare top performer – but, well done for 2022! It is always useful to have a look at the Vanguard Long Term Investing chart for a reminder of the compounding power of share investing.

Auto-Diversification

Superannuation

All of your Super contributions end up in a fund that is diversified to some extent. You usually can decide on how diversified you want it to be. For example, Australian Super offers, in their pre-mixed options: High Growth, Balanced, Socially Aware, Indexed Diversified, Conservative Balanced and Stable offerings. Even their High Growth option is split into a number of different asset classes – though their ranges seem a little ‘loose’ for full disclosure to their clients.

Australian Super ‘High Growth’ Pre-Mixed asset allocation by weight – June 2024

Slack Investor’s instincts has always been to be invested with the highest growth option … though I did reassess this a few years before retirement!

Other Investments

OK then, super is taken care of … but what if you want a diversified option for other investments that could be assured long-term growth without constant input. This is where robo advice might shine. Robo advisors usually package a mixture of low cost ETF’s into a diversified portfolio with automatic re-balancing.

Slack Investor is aware of many robo advisers that operate in Australia. ValueWalk has prepared an excellent summary article. Valuewalk compares and reviews: CommSec Pocket, Spaceship Voyager, Betashares Direct, Raiz, Sharesies, Pearler, Stockspot and InvestSMART.

Just for example, I will expand on the offerings of Stockspot as they have been going the longest and have the most assets under management ($800m). I have no financial interest in the company – though I am impressed with their results – outperforming 98% of similar funds over a 5-yr period. Depending on the risk profile that you want, Stockspot uses various combinations of just 5 low-cost ETF’s – one of which is gold.

There is a sliding scale management fee for which all admin and rebalancing is taken care of. For example, for account balances of $200,000+, there is an annual fee of 0.528% per year.

When Slack Investor loses the ability to stock pick growth stocks effectively (or, perish the thought … shuffles off this mortal coil!), I will set up some succession plans that will move our investments onto a secure ‘minimal involvement’ platform such as robo advice.

Slack Investor is old fashioned when it comes to ETF ownership. I much prefer the robo advisers that run under the HIN system (Holder Identification Number) – where the ETF’s are registered in your own name. This makes things simple if the robo adviser should cease operations e.g. Six Park (Aust).

The alternative is the ‘custodial’ system – where the investments are held on your behalf. Although custodial models can have lower costs – I like to see my name on the ownership documents. Stockspot is one of the advisers that run under the HIN system.

Although Slack Investor is a great believer in finding out about financial things for yourself with the magic of the internet. This way is not for everyone. Let’s just be clear, for most people, if you want specific advice on wealth management, tax advice, estate planning or a multitude of other finance problems, you are best counselled to seek a qualified financial adviser.

However, if you have a lump of money that you want invested in a diversified way that suits your risk profile, then robo advice seem a relatively cost-efficient way to ensure your investments are spread across asset classes. Naturally, Slack Investor would like the fees charged by robo advisors to come down a little before he parts with his Slack funds.

September 2024 – End of Month Update

Another month with a big range of daily closing values. The ASX 200 (+2.2%) and the S&P 500 (+2.0%) are in all time high territory. The FTSE 100 languishing and down 1.7% for the month.

Slack Investor remains IN for all markets.

The recent strength of the US market has pushed the closing monthly value to more than 15% above my old stop loss. I adjusted the stop loss upwards to a new ‘higher low’ of 5119.

Weekly chart for the S&P 500 Index showing the stop loss revised upwards to the new “higher low” of 5119.

All Index pages and charts  have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

The quarterly updates showing the shares in the Slack Portfolio have also been completed.

Retirement Fees … and September 2023 – End of Month Update

Tax collectors – Marinus Van Reymerswale  (c. 1490 – c. 1546)

The ruthless faces of the tax collectors depicted by Marinus Van Reymerswale do not ring true to Slack investor. These days, tax and fee collectors sit smugly behind desks as the fees and taxes roll in. Don’t get me wrong, Slack Investor is pleased to pay his fair share of tax … but excess fees for investing, that’s another story.

Most people have money in a super fund during their working life – this is normally known as an Accumulation Fund. When they retire, and the money can be released, they rely on this saved money to pay of debt – or fund their retirement. It is usual practice that you ask whoever runs your super fund when it is accumulating to also run your retirement fund – that pays you a pension at regular intervals.

For a fee, the super funds take care of the “back end” of this retirement fund – where your money is invested and all the administration for the fund. The Super provider sets up a new account within your super called an Account Based Pension (ABP). There is a great advantage in doing this as all earnings from from money transferred to this pension part of the fund are tax free if you are over 60. At 60, Slack Investor converted all of his accumulation funds into an Account Based Pension.

Naturally, Slack Investor is all for minimising these fees. Lets have a look at some of my favourite industry funds (Low cost high/performance) – Australian Super, Hostplus, UniSuper, and HESTA. Using the Chant West AppleCheck online tool available through the Australian Super site we can compare what they charge for running an accounts based pension.

For comparison, I invested our hypothetical ABP in the “conservative growth” option (21-40% shares) on all funds. This is usually the least risky of pre-mixed types of investments – and might be favoured by retirees. There are more other pre-mixed options that have better long-term performance – but these other options have more volatility. I have shown below the fees on a $550K account comprising of a $500 000 Account Based Pension together with a smaller $50 000 Accumulation account that you might have still running for any extra contributions.

FUND10-yr Perf (%)5-yr Perf (%)Fees 500K PensionFees 50K Accum.TOT Fees 550K
Australian Super5.13.52602322$2924
HostPlus4.72.93043404$3447
UniSuper4.83.52696356$3052
HESTA5.44.33152362$3514

The more you have … the more they charge.

Looking at just the cheapest of the above Industry Super providers, Australian Super with a pension account of $500K, $1m, and the current maximum amount for an accounts based pension $1.9m – again using the Chant West AppleCheck online tool.

Australian SuperFees – PensionFees 50K Accum.TOT Fees
$500K Pension Fund2602322$2924
$1m Pension Fund4802322$5124
$1.9m Pension Fund8762322$9084

You could argue that these fees are reasonable, at around 0.5% of your invested funds, as there are inherent costs in investing and responsibly administrating these large amounts of money. Take the time to check what fees you are paying on your Super fund – and compare with a low cost/high performance fund using the AppleCheck tool – it might be time to switch funds!

Comparing Retirement fees with SMSF funds

Slack Investor is a great fan of the Self Managed Super Fund (SMSF) but recognizes that it is not for everyone – you must really be prepared to put a lot time and thought into the SMSF for it to be successful. To save on costs, rather than divesting responsibility to an accountant, Slack Investor uses a low-cost (no advice) provider and takes on a lot of the administration duties and investment responsibilities himself.

Unlike the Industry funds sliding scale for fees, a significant advantage in SMSF funds is that the costs are fixed – no matter what amount you have. For the 2023 financial year, Slack Investor’s costs through his provider eSuperfund were.

TaskAmount
Admin and Audit Costs (eSuperfund)$1,330
Brokerage (10 trades)$300
ETF Fees$2,300
Time (50h@$50)$2,500
TOTAL$3,930

In the above example of annual fees, I have tried to include a charge for my own time at a nominal 50 hours at $50 per hour. On average, a hour per week. Most weeks I wouldn’t spend any time on my SMSF but, around tax time, and when making decisions about buying or selling, pensions, or contributions, I would spend a few hours thinking or researching. Annually, 50 hours is a fair approximation. I would gladly perform these tasks for free as finance is an interest and a hobby, but I’ve included them above to make a proper comparison – as not everyone is a Slack Investor.

Running an SMSF, because of their fixed costs makes more sense with a large super fund (>$500K). However, at the core of any successful self-managed fund (SMSF) is the amount of time and effort that the trustees (you, and other members of the fund) are willing to put into it.

Given the all the above data, it could be better, but the amount of fees that a good industry fund charges to run your pension seem reasonable at around 0.5% of funds under management. Slack Investor hopes that competition and transparency should gradually lower these fees.

September 2023 – End of Month Update

Slack Investor remains IN far all followed markets. The ASX 200 (-3.5%) and the S&P 500 (-4.9%) have had a poor month. However, the FTSE 100 is emerging from the doldrums with a positive month (+2.3%).

All Index pages and charts  have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index). The quarterly updates to the Slack Portfolio have also been completed.

The Long View

“Astronomie”, Georg Leopold Hertel and François Boucher, 1750 – 1778 – Rijksmuseum, Netherlands

What exactly these angelic cherubs are up to in this etching will remain a mystery to Slack Investor, but he would say that looking at things from a distance is a worthwhile trait in the stock market world. Slack Investor is currently in Europe on holiday and the geographical distance and time zone shift have helped him take more of a holiday from the markets … and just let them get on with it – without interference!

Take the long view

There are some scary headlines and plenty of volatility on the stock markets with worries about inflation and international bank collapses. Slack Investor will just pass on some sage advice. Here is the secret to being a good investor …

Don’t get caught up in what happens in three months, six months, or 12 months. It’s about the next five to seven years.

Paul Taylor, head of investments for Fidelity Australia and Portfolio Manager for the Fidelity Australian Equities Fund

Paul Taylor is no mug … his Australian Equities Fund is of the managed fund variety and, despite a slug of 0.85% p.a. in management fees, his fund has kept pace or slightly bettered the performance of the ASX 200 Accumulation index over the 5 and 10-yr periods. Even though the managers of the fund appear to know what they are doing, the difficulty of beating index funds over every time period is shown by the negative relative performance over 1 and 7-yrs.

Fidelity Australian Equities Fund performance compared to the ASX 200 Accumulation index – up to the end of February 2023.

Now, Slack Investor completely agrees with Mr Taylor, when investing in equities (shares), you should be locking them up for at least 5 years so that any volatility will be swamped by the beautiful long-term march of increasing value for Australian and International Shares. See the latest Vanguard Long Term Chart to see what I mean.

Slack Investor is still “pretend hurting” from his own last year’s (FY22) annual Slack performance (-14.3%). However, he realises his 5-yr and 10-yr performance is the critical measure for his Slack Fund. As these returns p.a. (13.5% (5-yr) and 15.2% (10-yr), are comfortably above benchmarks, I have reconciled the poor one year figures as just part of the volatility of owning mostly growth shares.

Contribute regularly to your savings

Whether adding to your super, or investment savings, the best way to do this is to add regularly, without even thinking about it. Set up an automatic personal deduction from your salary to your super – or automatically contribute to your savings through a vehicle that is in sync with your risk tolerances (e.g. Stockspot, Pearler).

As my super was accumulating, it was mostly in broad-based index funds (Australian and International). My other investments were mostly in individual companies.

While it’s possible to beat index funds, it’s not easy to do over the long run … and as it isn’t worthwhile for most of us to try.

Paul Samuelson, American Nobel prize winner in economics – from johncbogle.com

Slack Investor has some exposure to index-type ETF’s but continues to dabble in individual companies. Despite the above warning, Slack Investor will continue to “have a crack” at stock selection and portfolio management – but only while his long-term performance still stands up.

Things a Financial Advisor might tell you … and May 2023 – End of Month Update

From the Sydney Morning Herald

Slack Investor has blogged about financial advice before – and although an advocate of trying to do as much as you can by researching finance world yourself, it can be a very difficult journey to be across all the fields of saving, mortgages, investment loans, insurance, superannuation, taxation, and investment. 

Most people want financial advice but the problem is that it is so expensive. MoneySmart.gov.au outline a case study where “Rhett” has $400 000 to invest – He might be hit with fees of $13 600 in his first year of advice . These fees include a Statement of Advice and Insurance premiums and layers of platform and investment advice fees.

Where to invest your money is the easiest thing to sort out for yourself – with the key words being diversification and low fees. There are cost-effective ways of investing in a diversified way that will suit your risk tolerance without involving a financial advisor (e.g. Stockspot, Pearler). But some people (Not Slack Investor Readers!) need a trigger to just start investing. Finance world is much more complex than just investing your money. Slack Investor can see the need for finance professionals

Things a Financial Advisor might tell you

Firstlinks have trawled the data to determine the most recommended strategy used by financial advisers – the most common of these are listed below.

From Firstlinks

Let’s just have a look at some of these in more detail.

Rollover Your Super – “Rolling Over” your superannuation is just a way of describing the transfer of your “protected” super into another protected super fund. Slack Investor readers will be all over this one – Of course it makes sense to put all of your super with one provider to avoid multiple administration fees. Combine your super into one fund – preferably an industry fund (lowest fees) with a good 5-10 yr performance record.

Retain Your Super – This is again good advice for the long-term accumulators of wealth. Unless under extreme hardship, resist all attempts for early access to your super. During the COVID-19 outbreak, $4 billion was paid out to 456,000 people under the early super access scheme. This would have helped distressed businesses and individuals in the short-term but may not have been a great idea in the longer term.

Super Contributions – This is a more complicated area and, it might be good to have advice on when, and by how much ,you should boost your super contributions above those which are compulsory. This is tricky when you have competing loads on your take-home pay (Family, Mortgage, etc). Slack Investor was big on maximizing his super contributions once he had a firm grip on his home mortgage.

Apply for Insurance – When you have a family or debts (home loan?) to cover, life and disability insurance is a good idea. You don’t need an advisor to tell you this. Insurance through your super fund is usually the most cost effective way to do this.

Estate and Aged Care Planning – This area is really complicated for the layman. Professional Advice, or much research, needed.

Commence, Rollover, Retain Pension – You may need advice here if planning to mix aged-pension and super to fund retirement. If there are no aged-pension issues, Slack Investor believes that it is best to start an account pension (from your super) as soon as possible and re-contribute any surplus funds as non-concessional contributions.

Commence, Rebalance Investment – An old truth – Best time to start investing? 20 years ago. Next best time to start investing? Now! Rebalancing can be done automatically with cost-effective platforms e.g., Vanguard Super, Stockspot.

What Types of advice Do You Really Need?

The current financial advice system is complicated by well-meaning regulations that are in dire need of reform. In 2022, the Australian Treasury provided a consultation paper seeking feedback on changes to the regulatory regime that would allow financial advice on specific matters without the obligation that the advisor should know everything about your financial situation – No need for the expensive Statement of Advice (SOA).

Ideally, in a future world, you could get advice at various stages in your life from finance professionals at an hourly rate – perhaps in the same way you would consult a medical specialist about a problem. For Instance

  • Early/Mid-Career Advice: Am I on track with my savings, super contributions and retirement plan? What strategies should I employ to achieve my goals?
  • Pre-Retirement: Am I ready? Taxation Issues? Aged-pension/Super mix?
  • Estate and Aged Care Planning: Complicated – Many issues to discuss here.

Alternatively, you could just turn your financial future into a hobby (Like Slack Investor did), and use the internet and books to educate yourself.

May 2023 – End of Month Update

Slack Investor remains IN for Australian index shares, the US Index S&P 500 and the FTSE 100.  It was a dreary month for the Slack Investor followed markets. The ASX 200 performed poorly this month – down 3.0%, and the FTSE 100 even worse – down 5.4%. The S&P 500 was flat (+0.2%) for the month.

In this month of turmoil for stock indexes, the Slack Portfolio did quite well. This is because it is heavy with technology stocks that are having a moment in the sunshine. The Nasdaq 100 index was up 7.7% for the month of May.

All Index pages and charts  have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).