Hi DSD I was reading some madamswer posts and I recognised your...

Hi DSD

I was reading some madamswer posts and I recognised your alias from the RKN forum.

IOOF makes money by administering wrap accounts. Wrap accounts are pushed by financial advisors and enable you to hold a number of managed funds under the one umbrella. Most people seem to like going through a financial advisor for their investments and they tend to recommend a product like this. IOOF is able to “clip the ticket” on their wraps. This accounts for the majority of IOOF’s. So they are probably more of a software company than a traditional fund manager and part of the reason they are so cheap is because some of their software is a little dated.

IOOF also makes money by running funds directly and taking a fee for the management of these funds. They also make fees via financial planners that they operate and trustee and estate charges. Hopefully you can see the overlap allows some cross selling as well. Perhaps your financial planner is selling you a fund, a wrap for your fund and the possibility to act as a trustee.......... you can see how they all come together.

DSD, you probably will do well by following madamswer as he is the sharpest operator I have come across on HC. However, I always think you have to do your own research and if I didn’t understand the investment case I doubt I could handle the inevitable sell offs on shares I own. My experience in the market is post GFC, so I can’t say what I would do in that sort of situation. Though I hope by having my own valuations in play I would be able to make rational decisions.

Following your comments on the RKN post after running my own numbers (as presented) I feel comfortable despite the negative press releases. In fact I feel more comfortable if Fairfax is writing negative stuff! IFL is another of their favourite targets.