Why is it that small investors consistently knock out the big Fund Managers when it comes to investment returns? | Mollard Property Group
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Why is it that small investors consistently knock out the big Fund Managers when it comes to investment returns?

The reason is Residential Property investment. Residential Investment is now a 5.5 Trillion Dollar market in Australia. Over the past 30 years alone values have tripled and yet the Australian Fund Managers in their wisdom and denial have not had one cent in this spectacular rise, given their belief that capital growth is not a reality in residential property.

Incredibly, unlike the UK, Europe and American Fund Managers our Fund Managers have ignored this incredible asset class, to their peril. Some of the largest property portfolio’s overseas are in residential. Amazingly, Australia has one of the fastest-growing populations on the planet, yet our Fund Managers cannot seem to understand what this means.

Australian Mum and Dads understand the force of supply and demand much better than our local Fund Managers do, hence the reason why they keep winning the game. It is a real David and Goliath story, the big boys going down to the small and humble. It is a bit like Ninja Warrior on TV the unassuming small guys are the victors.

Fund Managers seek their name in lights, buying mega office investments with an anchor tenant, but are they safer or better?

We do not think so.

For Example, massive technology companies such as WorldCom worth $108 Billion went bankrupt, 30,000 employees lost their jobs and investors lost $180 Billion. Banks such as Lehman Brothers, the largest investment banker collapsed with assets of $600 billion and 25,000 staff, they went bankrupt after being in business for 158 years. Britain’s Barclays Bank was established in 1896, in 2008 went bankrupt and 18,600 employees lost their jobs. Remember how large Kodak, Nokia, Oroton and Dick Smith were, just to name a few. I could write pages on all the companies that were once household names that no longer exist.

Recently I read in the newspaper a Fund Manager boasting how they had spent near on a billion dollars on a building in the Melbourne CBD, on less than 1,400sqm of land. When I calculated the total cost of the land, development, construction and significant incentives to capture an anchor tenant, it was half of this acquisition price, meaning they had paid more than twice what it would cost to buy the land and develop it.

It would take all the rental income received over the initial lease term of approximately 11 years to cover the extra cost of what they had paid. BIG does not mean more profits, give me residential investment any day.