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Monday, 22 January 2018

(N)aiming To Confuse

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Seems legit. 
Long time readers of this blog will know that I stay close to the Centurion Gautrain Station. This has proved more than useful on a number of occasions.

And it seems that other people also appreciate the benefits of what I think is a pretty reliable and efficient service, because over the past 2 and half years that we have lived here, I have noticed that the Centurion Station seems to have become busier and busier - evident by the increasing number of cars which end up parking outside the station on the grass, on curbs and in all sorts of hidden corners and spaces.

The good news for commuters is that since about the middle of last year, Gautrain have been hard at work building an additional parking lot across the road from the station. The bad news for the nearby residents, myself included, is that this has resulted in a road closure while they do some of the more hardcore construction.

And because that is not sufficient inconvenience for nearby residents, a few months ago, a major intersection just one block away from the Gautrain station, collapsed due to a sinkhole. So the parallel road has also been closed while they wait for the ground to settle before they effect the necessary repairs.

And so for the last few months commuting has been “somewhat interesting” as we try find new and creative routes to get to where we need to go.

My daily work commute has also been amended to circumvent the chaos.

In an excellent display of road safety, I snapped this pic of
said building while driving past.
My new route is fortunately only about 2 minutes longer, and not that much further than my original route. The new route also takes me past a building called the “Centurion Office Park”. The first time I saw it, I did a double take. Not because the building is remarkable in any way (in fact it is  a pretty run of the mill office park) but because of the name.

Once confirmed that the building was indeed named the “Centurion Office Park” I immediately thought, wow - is that seriously the best name they could come up with?

I mean an office park in Centurion called the Centurion Office Park – who wudda thought? Could it get more bland and uncreative than that? They must have got an Engineer a robot to name it!

But then it occurred to me that, although entirely uncreative, it is actually quite a brilliant name for the building. It tells you exactly:
  1. Where it is located
  2. What it is used for
If you had never seen or heard of the building, you would know pretty much all there is know abut it. It’s all right there in the name.

And simple, clear names like this are sometimes welcome - especially in the investing world where there are a myriad of products with names which all seem to be competing for the most confusing award.

Luckily for us, Index Tracking ETF’s are the Centurion Office Park of the Investing world. (Note I am not talking about the new age fancy smart beta ETF's here, I am talking about the good old plain vanilla index trackers.)

When you invest in an index tracker, you know exactly what you are getting. Nothing more and nothing less. The name pretty much tells you all you need to know about what you are investing in. You also know that you will achieve the performance of the index you are tracking (less fees of course).

A Top 40 ETF will invest in the Top 40 shares and give you the performance of the Top40 Index. A Worldwide ETF will invest in shares from across the globe and give you the performance of the Worldwide Index. It is plain and obvious, the name tells you all you need to know.

Compare this to Unit Trust products where not only is it usually tricky to determine what exactly the fund is investing in, but you may or may not beat the benchmark. You may or may not pay performance fees. And you may or may not know what is going on underneath the hood.

And while the ETF’s usually have yawn worthy but to the point names like Top40, or PropTrax10, check out these clear as mud names for some Unit Trusts I found (I am omitting the name of the asset manager because I am not meaning to pick on any of them):
  • Guarded Fund (So guarded you can’t tell what it’s supposed to do!)
  • Temperate Fund (Better than a sub-tropical fund?)
  • Multi Managed Accumulation Fund of Funds (Since it’s a fund of funds fees are probably the only thing accumulating…)
  • Real Return Focus Fund (Fake returns just don't cut it.)
  • Unconstrained Fixed Interest Fund (Because who would want their fixed interest constrained?)
You look at these names and you end up with more questions than answers.

In fact I would go so far as to say that the more fancy an investment product's name is, the less likely you should be investing in it!

And then there is this (which I found to be extremely misleading and, because I am not invested, somewhat amusing):

A certain Unit Trust provider offers a Unit Trust called the Entrepreneur Fund. Curious to find out more, I checked the fund’s fact sheet (as at December 2017). It states the fund is suitable for investors who “require specific exposure to small- and mid-cap sector shares”. A perfectly acceptable mandate. Interested to see what shares they held, I scrolled down to see the top 5 holdings. And low and behold, top of the list, and their biggest exposure.....

Wait for it......

6.8% in Naspers!

Yes Naspers.

A fund designed to give you exposure to small- and mid cap shares has it’s largest holding in the biggest Top40 stock of all? It's bordering on comical!

No wonder people are so confused about most investment products….

I think I will just stick with my Centurion Office Park- type investments.

ETF’s for the win!

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And then just FYI - I have created a Stealthy Wealth Facebook page. If you want to like, follow, or rate it (or whatever it is that the cool kids are doing these days) you can find it here - https://www.facebook.com/stealthywealth/




Till next time, Stay Stealthy!
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