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  1. #16
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  2. #17
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    Thanks for mentioning this and the Stuff article. The main points are that sure a fund may be doing well but when the music stops and it will, you will take a huge haircut in your invested capital.

    The funds that are performing above benchmarks need to as the risk is higher than a fully liquid fund with similar performance.

    If you have second thoughts and try and withdraw when there is a run on the fund this is when losses will be crystallised.

    I think what people need to consider is diversifying their invested capital between a few structures and also asking themselves how they would react if there is a run on the fund. Ideally you would remain but there is huge uncertainty in the value of the remaining units.

    I suggest diversifying between different structures, looking at 10y performances, % held in what companies and being ruthless if the fund is looking average. This is because the risk profile is higher than a more conservative fund.

  3. #18
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    this doesn't really apply to KiwiSaver funds though. They will almost certainly never experience a massive run because people cant withdraw until 65. Or, even if say one particular fund has a huge number of transfer requests outwards it would never be like a full scale run because most people don't take that active an interest in their KS.

    Which is kind of a good thing about KiwiSaver for the average person who may well be inclined to liquidate their losses during a financial crisis scenario (if they are able to).
    For clarity, nothing I say is advice....

  4. #19
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    Quote Originally Posted by peat View Post
    this doesn't really apply to KiwiSaver funds though. They will almost certainly never experience a massive run because people cant withdraw until 65. Or, even if say one particular fund has a huge number of transfer requests outwards it would never be like a full scale run because most people don't take that active an interest in their KS.

    Which is kind of a good thing about KiwiSaver for the average person who may well be inclined to liquidate their losses during a financial crisis scenario (if they are able to).
    My understanding is funds like Milford Growth Fund that are 'mirror' images of Kiwisaver growth fund with a higher proportion of unlisted investments then it could affect their returns?

  5. #20
    Guru peat's Avatar
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    Quote Originally Posted by kiora View Post
    My understanding is funds like Milford Growth Fund that are 'mirror' images of Kiwisaver growth fund with a higher proportion of unlisted investments then it could affect their returns?
    well my point is that liquidity requirements are less likely to affect a KS fund.
    Any non KS mutual fund will potentially have returns affected by liquidity in the usual way which is : being able to accept lower liquidity can potentially increase returns (as long as you're not forced to liquidate at a bad time).
    I understand this is called a liquidity premium.
    And the converse is true that if you require high liquidity your investments will likely have lower returns.
    For clarity, nothing I say is advice....

  6. #21
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    Quote Originally Posted by Schrodinger View Post
    Thanks for mentioning this and the Stuff article. The main points are that sure a fund may be doing well but when the music stops and it will, you will take a huge haircut in your invested capital.

    The funds that are performing above benchmarks need to as the risk is higher than a fully liquid fund with similar performance.

    If you have second thoughts and try and withdraw when there is a run on the fund this is when losses will be crystallised.

    I think what people need to consider is diversifying their invested capital between a few structures and also asking themselves how they would react if there is a run on the fund. Ideally you would remain but there is huge uncertainty in the value of the remaining units.

    I suggest diversifying between different structures, looking at 10y performances, % held in what companies and being ruthless if the fund is looking average. This is because the risk profile is higher than a more conservative fund.
    Errr.... when its not doing well you want to be buying more... why the F would you withdrawal at the worst possible time? if your'e emotionally driven and will follow the sheep when everything adjusts and want to bail cause your'e scared theres always term deposits.

  7. #22
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    Quote Originally Posted by alistar_mid View Post
    Errr.... when its not doing well you want to be buying more... why the F would you withdrawal at the worst possible time? if your'e emotionally driven and will follow the sheep when everything adjusts and want to bail cause your'e scared theres always term deposits.
    If you actually read the commentary we are talking about portfolio risk and what happens when the market turns - these funds need to be performing high and you technically have zero liquidity if there is a run. The conversation is about portfolio risk and not about if you favour term deposits v funds.

  8. #23
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    "Here’s what smart rich people really do with their nest Egg"
    //www.marketwatch.com/story/heres-what-smart-rich-people-really-do-with-their-nest-egg-2018-07-11?siteid=yhoof2&yptr=yahoo

  9. #24
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