Hi intelligent minds,
I am looking for aquality investment for my teen (who is now 15) to pay for university fees in 7years, just before graduating. The characteristics I am looking for are asfollows:
1) ETF or LIT with qualityinvestments and low rotation of the holdings.
2) A fund manager whohas a long track record of good performance and offers a variety of ETFs.
3) Newly establishedfunds with distributions & DRP.
I intend on buying thisinvestment on COMSEC through a trust account until the minor turns 18, then theinvestments will be transferred to his account avoiding CGT event. It is importantto retain the features above, to minimise assessible income until he turns 18 andgets a benefit of a CGT discount upon selling in 7 years. There are certain ATOcriteria that need to be met when managing a minor’s trust account.
After reading thisthread and listening Hamish’s latest webinar “Why consistency wins the race”, availableon their website, I concluded that investing in emerging markets would not besuitable for my objective. I looked through different suggestions on ‘Equity Mates’forum on Facebook, and most people recommend HYGG, MAET, NDQ, HNDQ, IVV, VGS.
All these funds havebeen on the market for a while and have accumulated significant capital gainswhich are distributed to unitholders when holdings rotations happen. This createsearnings leakage, as I will be taxed at 66% for eligible income between $417 to$1,307 and 45% over $1,307 until he turns 18. I think it is important to focuson this, as the investments would feature low returns in the future.
I am leaning towards thenew Magellan Sustainable Fund (MSUF) which ticks all the boxes. I believe ESG globalstocks, which MSUF is holding, will be gaining popularity in the future andtake over meme stocks like Tesla.
I have done my math based on the initialinvestment of $25,000, 4% distribution yield, my holdings in MHHT & MGF (taxcomponents in the last 2 years). The other assumptions are based on an estimate,as I am not aware what the investments rotations will be in the fund. If the funddelivers an annual return of 9% over 7 years, I expect that the crystallised capitalgain & distribution in year 7 after tax could be approximately $22.5k,assuming he does not have any other assessable income. This is in addition to the initial investment of $25k.
I am a bit concernedabout a high concentration of Magellan investments in my portfolio and am lookingfor alternatives. Do you know any other funds which would be as good as MSUF?
These are my estimatesbased on the research I have done, and it is not financial advice.
Thank you for yourcontribution to this thread, it was a great pleasure to read it.
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