The MB fund cometh

A few months ago we put out a survey asking members if they were interested in an MB backed investment solution to manage the core or nucleus of their portfolio. We have had a significant amount of interest and follow up questions from MB readers and so I thought it worth sharing some of the developments.

First, it’s going ahead. Watch this space.

We have agreed on a partnership with a group headed by a respected analyst who will be familiar to longer term MB readers. He helped to co-found Australia’s largest independent equity research house in the early 2000’s then spent six years running asset allocation strategies at a broker where we used to publish extracts from his reports. For the last three years MB unfortunately lost access to his work because he was snapped up by a major international fund manager where he has been helping them manage over $60b in international shares. Now we’re very excited that he will manage the MB fund.

The fund will be driven by macro principles and asset allocation. Investments will be in direct shares, cash and bonds globally. There will be a team of analysts based around the world to help with the stock selection. Leith and I will sit on the asset allocation investment committee and the fund will directly reflect MB points of view.

But more on that later – the shackles are still on our investment manager so we are limited as to what we can say.

Some survey highlights:

1. There is significant interest – 90% of responses were in favor. While this is skewed by the thought that if you weren’t interested you wouldn’t fill in the survey, the number of responses and the nature of the comments suggested that investors are keen for an investment solution that embraces the core investment themes of MB without multiple levels of fees.


2. Having access to an advisor to talk to was not really a priority for most investors. Our thought at this stage is that we will give investors the option of paying less and investing directly, or paying more to have an advisor guide you through the process.  The hope is that with a transparent investment structure and regular seminars / webinars that most investors won’t need to pay the additional amount.


3. When it came to the key things that investor were looking for, integrity and fees led the list (note that respondents could choose more than one response)


4. Transparency / tax efficiency was the key to the investment structure – and the more money investors were looking to put in, the more important it was.


In short, the fund will be directly held by you, will have complete transparency on your complete holdings at all times and be cheap!

If you are interested in keeping abreast of the latest developments and / or want to have input into the investment structure through future surveys, please fill in your details below. We’ll get back to you soon with the product disclosure statement (PDS).

Fill out my online form.

David Llewellyn-Smith
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  1. What will happen if there is no good thing to invest in? Would you short markets it’s allocate into cash?

  2. Pictures don’t work.

    But well done – this is a good idea. The democratisation of knowledge, and the ease of application of ideas, means you could do very, very well, and start a whole new global phenomena…

    Well done. I wish you all kinds of success…

  3. For the average Bloke investing in a slowing / contracting / descending economic environment is a challenge so this will be a great opportunity. Thanks in anticipation.

  4. “Leith and I will sit on the asset allocation investment committee”
    I’m not sure that’s a good idea, for what its worth. Stand back and let others interpret your thoughts, is my suggestion.
    Gareth Morgan did similar to what you are proposing in NZ, and being on the Investment Committee really hampered the dispassionate decision making that is so crucial to following any investment philosophy – woods and trees thing, I guess.
    The result? His Fund failed to match his competitors or the wider market as he became so concerned at ‘not losing your money!” that he missed most of the upside to the markets, even in his Active option. Eventually he sold out for a handsome profit to…..a bank ( Kiwibank). That….is when I left his fund……
    But good luck all the same

    In 2000, Gareth established Gareth Morgan Investments Limited (GMI), a personal investment portfolio management service, which has grown to be one of the largest private businesses of its type in New Zealand. When the New Zealand Government initiated KiwiSaver in 2007, Gareth Morgan KiwiSaver Limited (GMK) launched the Gareth Morgan KiwiSaver Scheme.

      • kiwikarynMEMBER

        Does that mean you will be predicting a market crash for 9 out of the 10 years of a bull market? Running an unhedged fund in the belief that the $ is going to 40c? Hedge Funds who have taken contrarian views over the last few years due to similar outlooks have been forced to shut up shop this year, and return what little money was left to unit holders. Running a successful fund requires that one is able to admit that they are wrong, and to quickly change course – not stick to their dogma regardless of evidence. Ego and hubris in the belief that “they are right and the market is wrong” is what leads the majority of fund managers to not beat the index.

      • I don’t know. Are you still beating your husband?

        You’re being silly. There are shorter term and longer term narratives. Some are bullish, some are bearish. We’ll be using them all.

      • It would be good if you arranged it in a way that allows market makers to issue puts over the Fund.

      • kiwikarynMEMBER

        “Are you still beating your husband?”
        So your response to my comment is to make a juvenile and defamatory (and unfounded) accusation of domestic violence against me? Are you serious? What are you? A 15 year old Internet troll masquerading as an adult?

      • I was mocking your use of the leading question. It’s from philosophy 101. Don’t presuppose your own conclusion if you want to discuss something like an adult.

    • That’s Boomer talk! More to life than counting coins, especially if you’re already got a pocket full of them.

      I suspect that so long as the site isn’t costing them money they’re more than happy with seeing the tangible influence they’re having on Australia’s economic narrative and nudging it away from the course it was headed. Patriotism comes in many colours.

      • Stewie, I would assume the deal is not to increase the wealth of the promoters, but to increase the wealth of those who follow. Any fund run on the guidelines of this site would be an interesting apparatus.

    • I put $10K into a Stockspot fund last year, and I would’ve been better off leaving the money in the bank.

    • There’s others out there too Craftsman….. although I’d suggest a lot (not all) are doing the same as each other & the difference between these might be in their marketing. During due diligence you might look at runs on the board, tactical/strategic outlook, overall performance, agility & MER’s, but it may come down to who you feel fits your risk profile the closest, or which one aligns with your strategic outlook the best? It’s an individual thing.

  5. Pictures not working.
    I’m not a subscriber mainly as I find the comments moderation/unilateral banning with no warning to be annoying, but, I would definitely be interested.

    If I had a SMSF, I could invest through that presumably. Will you guys be legit to the extent the ATO will accredit you for SMSF investments.

    Cheers, and good luck.

    • If you’re not a subscriber then you don’t see the multiple warnings that prelude a banning or deletion. Despite the bleating it has never seen (that I can recall) a first-time, unilateral ban.

      • Bleating is quite inflammatory language particularly as there definitely has been a no warning ban.

      • UE as I said:

        “If I had a SMSF, I could invest through that presumably. Will you guys be legit to the extent the ATO will accredit you for SMSF investments.

        Cheers, and good luck.”

        Notwithstanding other comment about minimum investment – someone said it’s 1M?

  6. Registered.

    Two thoughts: First I hope that minimum for entry is not too steep (5-10K), for small time players like me. Second: Will the fund be actively shorting given the low growth scenario all around?

  7. What’s the ETA on the fund and estimated minimum investment, or investment “blocks” required? I am sure the prospectus will have more details like the MER, but any advanced info/details would be appreciated.

  8. How about instead of being yet another group of clowns trying to run a fund you do something useful like advocate for the average joe who doesn’t know a thing about super that is getting screwed on fees and shitty insurance. How about calling out ASFA on their bullshit, pressure large funds to offer an alternative to SMFS (better/cheaper than what they already do), Vanguard could probably shake up the Superfund industry while they are at it too.

      • Kudos to you guys for doing so.

        However I feel like opening up shop next door sounds a little lame in an era of fintech startups.

    • “How about instead of being yet another group of clowns trying to run a fund ”

      I hope they get it off the ground. I want to see the performance after a few years. Marked to market and after fees of course.

    • There are already low cost alternatives to SMSFs (other than the ability to hold physical assets such as property). You can access direct shares, ETFs (range of available options gradually increasing) and term deposits. If you like Vanguard you can access some of their ETFs.

      Alternatively there are some platforms that provide access to Vanguard pre-mixed managed funds at around 0.6% pa total cost – similar to other low cost options.

      • Yes I am aware of this and I have actually bothered to go through the PDS on alot of these products and they are shit house. Before you say “then get a SMSF”, I have but that’ts not the point.

        If you want to put pressure super funds in this country a start up fund with a few million, hundred million or billions in AUM isn’t going to do it.

        I will let you do the math, whats 0.1% of $2 Trillion?

      • I think there is a continued reduction in fees and improving flexibility overall. It won’t happen overnight but it has been an iterative process. There will always need to be admin fees for super as there is an element of legislative change and constant impact on admin overheads. FinTech pressure will help further improvements.

        It isn’t a terrible situation right now. It used to be with punitive entry and exit fees and 2% and more investment costs.

      • ING Living Super would be great if it wasn’t for the stupid restrictions. 80% max in the shares category and 20% in any one security. If you only intend to use ETFs it’s useless.

      • And with regards to SMSFs, they are typically quite high cost unless you have a very large balance. The main benefit is greater choice and direct property investment. For most people, they tend to be very expensive as a % of the balance.

      • “And with regards to SMSFs, they are typically quite high cost unless you have a very large balance. ”

        Unless truly self managed this is the case. You need $500k and over to justify it, if you aren’t doing almost everything yourself.

  9. Are you going to push this fund on to WRAP platforms? This will make it easier for people to invest in this fund using super.
    Most people don’t have $25k lying around for a single retail managed funds.

  10. You will need an AFS license or a responsible entity, particularly for any fx related calls you choose to make.

    This is not a simple undertaking. Get in touch if you intend to use a license

  11. Individuals need to take responsibility for their OWN investments & NOT let others make the choices for them. You can sleep well when it’s yourself in total control of your own Investments – Investments made after due diligence. Some of the comments above re SMSFs are totally incorrect – the sort of nonsense peddled to their Agents by the likes of AMP & the Banks. You can easily run a SMSF with no more than an exercise book to record transactions & a Dedicated bank A/C. Set up costs are minimal & needed capital a lot less than the PTB would have you believe. Check the Co Below – Personally recommended

    • That’s correct. If you are willing to do the admin work yourself (time) and have some investment nous it is the way to go. If you don’t have time, be prepared to pay $2,500 to set one up, and $2,500 to $3,000 to have the books and audit done every year. Then you can throw in ongoing advice fees. This can be fine, as long as you get service and value out of the ongoing advice fees.

      Otherwise, just buy Aussie Blue Chip shares and Corporate Bonds direct, and use ETF’s and LIC’s like the below to get other exposure you need to the asset class you need.

      – IVV
      – IOO
      – STW
      – VAS
      – MFF, MGE
      – QAU, GOLD
      – VAP

  12. A Global macro advisory with reasoning & educational/application sounds pretty good! A one stop shop in some respects……… But what will set you apart?

    There are some US centrics doing this, but most seem to be in marketing overdrive & I haven’t followed them enough to measure their ability over their obligatory self hype.

  13. Is there any publically available information about performance and what your benchmark is (if there is one)?

    • I’d be interested in that information as well. Are you going to benchmark each asset class against the relevant market benchmark, e.g. Aussie shares allocation vs ASX 200, or is it going to be absolute return – i.e. CPI plus XXX%?

  14. Good luck with the MB fund.. I guess, on the positive side, you’ll have a “skin in the game” and your market calls (whether good or bad), will hit your pocket as well 🙂