Case: REVEREND ROB PONDERS MANAGED FUNDS
Reverend Rob is the minister of a church in the Hobart area. He is married, has one young child and earns a ‘modest income'. Because religious organisations are not famous for their generous superannuation programs, the Reverend has decided he should do some investing on his own. He would like to set up a program that enables him to supplement the church's superannuation fund and at the same time provide some funds for his child's university education (which is still some 12 years away). He isn't out to break any investment records but feels he needs some backup in order to provide for the long-term needs of his family. Although his income is meagre, Reverend Rob feels that, with careful planning, he can probably invest about $250 a quarter (and, with luck, increase this amount over time). He currently has about $15 000 in a savings account that he would be willing to use to begin this program. In view of his investment objectives, he isn't interested in taking a lot of risk. Because his knowledge of investments extends to savings accounts, Commonwealth Government bonds and a little bit about managed funds, he approaches you for some investment advice.
QUESTIONS
1. In light of Reverend Rob's long-term investment goals, do you think managed funds are an appropriate investment vehicle for him?
2. Do you think he should use his $15 000 savings to start a managed fund investment program?
3. What type of managed fund investment program would you set up for the Reverend?
Include in your answer some discussion of the types of funds you would consider, the investment objectives you would set, and any investment services (for example, withdrawal plans) you would seek.
Would taxes be an important consideration in your investment advice? Explain.