Goodbody Equity Fund

[sole]

Goodbody Equity Fund​

The Goodbody Equity Fund is a unit-linked fund managed by Goodbody Stockbrokers and administered by Hibernian Life & Pensions.

Seem to just charge 1% pa.

Anyone any experience of this fund?
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[gonk]

Had a look at their most recent update:

[broken link removed]

Thing that struck me was their holding 9% of funds in cash. What's that about? If it's an equity fund why don't they buy equities with it?

 

[LDFerguson]

Most funds hold a percantage in cash for liquidity. If an investor wants to leave the fund, they get paid out of the cash element. It means that the fund manager doesn't have to sell equities every time some wants to leave the fund. It might not be a good time to sell.

Liam D. Ferguson
www.ferga.com

 

[gonk]

Most funds hold a percantage in cash for liquidity. If an investor wants to leave the fund, they get paid out of the cash element. It means that the fund manager doesn't have to sell equities every time some wants to leave the fund. It might not be a good time to sell.

Liam D. Ferguson
www.ferga.com

9% seems like a large percentage though. As for investors exiting the fund, the timing of that is a matter for the individuals concerned. If the fund manager has to sell shares at a low price to fulfill their sell orders, that's their problem. It seems to me by holding a lot of cash the fund manager is reducing the possible returns to the investors who remain in the fund.

I have investments in a number of other equity based funds and none to my knowledge would have anything like 9% in cash. And, don't forget that the 9% in cash is subject to the same annual 1% management fee as the rest of the fund. Charging an annual 1% fee to investors to take a substantial proportion of their funds and put it in a deposit account seems like money for old rope to me . . .

 

[LDFerguson]

I don't know the size of this particular fund so I can't really comment on whether or not 9% is a big cash holding. The bigger a fund gets, generally the lower the cash portion, in percentage terms.

As for investors exiting the fund, the timing of that is a matter for the individuals concerned. If the fund manager has to sell shares at a low price to fulfill their sell orders, that's their problem.

Not really. Given the collective nature of a Managed Fund like this, a fund manager cannot simply pass on a loss to an individual investor who happens to want to cash out at an inopportune time. If the fund suffers a loss, all investors are affected.

 

[gonk]

Given the collective nature of a Managed Fund like this, a fund manager cannot simply pass on a loss to an individual investor who happens to want to cash out at an inopportune time. If the fund suffers a loss, all investors are affected.

I still can't get my head around this. I can understand if a fund is holding, say, fifty different individual companies' shares, a relatively small encashment might be too little to warrant selling shares in each company in proportion to the value of the encashment. Similarly, if there are small investments, especially if an investor is making a regular monthly payment, it might be necessary to aggregate several investors' new funds before going to the market to buy shares. Both these circumstances would warrant keeping a small amount of the overall fund as a cash "float". But 9%? Doesn't make sense to me and wouldn't be attractive to me as an investment. How would one investor cashing in affect returns for other investors? It's not a with profits fund, so there's no "profit smoothing" involved.

You may have put your finger on it, when you note you don't know the size of the fund. I imagine the smaller the fund, the higher a proportion of the fund would need to be held in cash.

 

[sole]

You may have put your finger on it, when you note you don't know the size of the fund. I imagine the smaller the fund, the higher a proportion of the fund would need to be held in cash.

I am told the fund has over 10 million euro. Is this important?

 

[col]

Probably want to keep a lot of cash in your fund to pay their ongoing fees!!!!

 

[gonk]

I am told the fund has over 10 million euro. Is this important?

Well, if true, this would be about the same size as Eagle Star's Irish Equity fund (€11m)

([broken link removed])

From the above factsheet for Eagle Star's fund: "Indicative equity exposure: 100% of the value of the fund" This only makes me wonder even more what Goodbody's are doing with 9% of their investors' funds in cash . . .