Are my SmartShares working?
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I have been chipping away at buying into the SmartShare fund NZ Top 50 (FNZ) for 14 months now. Statistics out recently tell me that this is the most popular of their funds so I’m moving with the crowd and many small time investors like myself are getting involved it seems.
I started with an initial $2,000 lump sum, tested the waters by drip feeding just $55 a month for a bit, then increased that to $101 a month (why the weird amount? So that I can recognise it on my bank statement easily of course). That is ‘set and forget’ now and just comes out without me thinking about it. Then I also started dropping lump sums of between $1,000 - $5,000 as cash flow allowed. I had a term deposit mature and I am reinvesting that money into this FNZ fund over time.
It is a bit of an ad hoc “regular” savings plan but one that suited me as I got my head around how SmartShares works and IF it is going to work for me.
And today I am trying to find the answer. Is it worth it? I have invested $11,629 of our own money in total into this FNZ fund. Current value is $12,011.
That is a 3.18% return which is made up of $298.75 in dividend payments and an ever so slight increase in the price of each share. It is after tax and fees.
You, like me, probably feel a bit deflated. 3.18%! Might as well have put it in a term deposit?! The table below shows Investor Returns after 1 Year being 6.51%! So what happened to me?
Because no one has yet worked out how to predict the future (someone really needs to get onto that please) the returns you see above are of course historical. I’m headed into unchartered waters here, who knows what all the 50 companies who make up this index are going to perform like in the coming years? From everything I have read chances are they are going to be doing fine though, so without even looking at the share price, I have been investing regardless.
I had a chat with the ever helpful Dean from SmartShares and he helped explain to me what I’m reading when I look at the historical returns of the fund in the table above. I’m probably going to butcher his concise explanation but basically some returns show dividend reinvestment and some do not. This will create a big variation in the two returns showing. I don’t think I’m going to take it any further than that because what I’m interested in are my own numbers, that is the truest indication of MY performance that I will get.
My ever useful graphic designer husband has dropped pins showing when we have been purchasing shares. Over the past 12 months our lowest purchase price has been $2.08 and our highest has been $2.31. This is my clunky form of “dollar cost averaging”! If I was following it to the letter I would have stuck with the same amounts each month.
And a VERY important point to keep in mind before you feel sad for me about my small return of 3.18% is that my money only starts working for me once it is invested. The $5100 I invested back in Oct has only had the chance to start making money for six months. The $600 I invested at the start of April has only had two whole weeks in the market. Only a few of the shares have been working a full year. Things are just getting started folks and the longer my shares are exposed to the market the more returns I will receive (if the market continues to perform)!
My Index Funds are in it for the long haul. Although the sums I invest into it are uneven, the fact I invest every month is the key. I’m laddering buying into my fund so I avoid buying in a peak (or a trough). Some months I win and get more bang for my buck and some months my money buys me less. The fact that I’m already receiving dividends (that I reinvest) is a sign of things to come. And I’m chuffed that I have squirrelled away over $11K in a short space of time.
So, I’m happy with how things are going. I’m holding my path and am going to keep doing what I’m doing. The fact I own a little bitty piece of every company listed below and that my passive investing combined with their hard work has given me some dividends is exciting to me and I’m keen to keep going. I can’t retire yet and live off my 3.18% but because I’m diversified in my investing it all just adds to a slowly growing pot of funds.
I keep thinking of those rental property owners amongst you who will be sniggering at my return when comparing it to their own capital gains! But I’m pleased to say that I own everything I have invested, the tenants never buggered off and the roof did not leak in all this rain during the week! I’m sticking to my own investment plan which may be entirely different to yours but the takeaway is this: I’m saving regularly and using an investment strategy I understand and one that is working for my family. I hope you are doing the same.
The following companies are currently held in the FNZ Fund:
AIA Auckland International Airport Ltd.
AIR Air New Zealand Ltd.
ANZ Australia and New Zealand Banking Group Ltd.
ARG Argosy Property Ltd
ARV Arvida Group Ltd.
ATM The a2 Milk Company Ltd.
CEN Contact Energy Ltd.
CNU Chorus Ltd.
CVT Comvita Ltd.
EBO Ebos Group Ltd.
FBU Fletcher Building Ltd.
FPH Fisher & Paykel Healthcare Corporation Ltd.
FRE Freightways Ltd.
FSF Fonterra Shareholders' Fund Units
GMT Goodman Property Trust
GNE Genesis Energy Ltd.
HBL Heartland Bank Ltd.
IFT Infratil Ltd
IPL Investore Property Ltd.
KMD Kathmandu Holdings Ltd
KPG Kiwi Property Group Ltd.
MCY Mercury NZ Ltd.
MEL Meridian Energy Ltd
MET Metlifecare Ltd
MFT Mainfreight Ltd.
MPG Metro Performance Glass Ltd.
NZR The New Zealand Refining Company Ltd.
NZX NZX Ltd.
PCT Precinct Properties New Zealand Ltd.
PFI Property for Industry Ltd.
POT Port Of Tauranga Ltd.
RBD Restaurant Brands NZ Ltd.
RYM Ryman Healthcare Ltd.
SAN Sanford Ltd.
SCL Scales Corporation Ltd.
SKC SKYCITY Entertainment Group Ltd.
SKT Sky Network Television Ltd.
SPG Stride Property Group
SPK Spark New Zealand Ltd.
SUM Summerset Group Holdings Ltd.
TGH Tegel Group Holdings Ltd.
THL Tourism Holdings Ltd.
TME Trade Me Group Ltd.
TPW Trustpower Ltd.
VCT Vector Ltd.
VGL Vista Group International Ltd.
VHP Vital Healthcare Property Trust
WBC Westpac Banking Corporation
XRO Xero Ltd.
ZEL Z Energy Ltd.