Investing in an asset management company, index fund, Listed Investment Company (LIC) or Exchange Traded Fund (ETF) is a great way for those individuals who aren't necessarily financially savvy, to grow their wealth over time.
There are many worthy managed funds and ETFs listed on the ASX, many of which will also give investors exposure to international markets. Deciding whether to invest in an ETF, LIC, index fund or fund manager isn't always easy because each have their pros and cons.
Therefore, I've highlighted three of my favourite investments for passive investors to consider owning below.
LIC – WAM Capital Limited (ASX: WAM)
Owning a Listed Investment Company (LIC) is easy since you simply buy shares on the market through your brokerage account. One of – if not the – best LICs on the market is WAM Capital. Run by Chairman/Portfolio Manager, Geoff Wilson, WAM Capital has outperformed the market by an average of 10.2% since August 1999, achieving an average 17.9% annual return. While past performance is no guarantee of future returns, I'd comfortably add some WAM Capital units to my portfolio today.
Asset/Funds Management – Magellan Flagship Group Ltd (ASX: MFG)
Instead of investing in the performance of a fund or portfolio, ASX investors can also buy shares in the companies that undertake the investing and benefit from management and performance fees. Magellan is one of Australia's leading funds management businesses, run by CEO and Chief Investment Officer Hamish Douglass. Despite an astounding rise in share price over the past five years, Magellan's funds continue to grow – boding well for increased returns over time.
Managed funds – Platinum International Fund
Run by its billionaire founder and significant shareholder, Keir Neilson, Platinum Asset Management Limited's (ASX: PTM) International Fund has returned an average of 13% since April 1995. $20,000 invested in the fund at inception would be worth around $252,000 today, compared to the market's return of roughly $71,000. As at 30 September 2015, the fund's largest sector exposure was information technology (26.5% of the fund). Alphabet Inc, the new name for Google, was the largest holding (3.2%).
Foolish takeaway
If you're not cut out for direct share market investing it's ok. However, historically, and over the long term, share markets have proven to be the best wealth generators of all asset classes – by a long shot. Therefore, in my opinion, finding a low-cost managed fund or ETF is a great way to passively grow your wealth over many years – with fewer headaches than direct investment.
