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Discussion in 'Managed Funds & Index Funds' started by Property WA, 9th Oct, 2007.

  1. Property WA

    Property WA Active Member

    Joined:
    31st Jul, 2007
    Posts:
    44
    Location:
    Perth, WA
    Hi all,

    Just wondering if anyone has thoughts or has used the EIM Emerging Resources Share Fund?

    Emerging Resource Company Share Fund

    In no way am I recommending it - just after your thoughts. It kind of coinsides with my discussion earlier on the Core/Satellite approach with this being one type of Satellite option.
     
  2. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Property WA,

    WOW!!!

    Umm p24 of the PDS says the MER is 6.49% pa

    I've never actually seen a fund with an MER this high, most are between 0.90% and 1.50% pa. 6.49% pa does seem rather excessive, the fund has to at least perform 6.49% to breakeven...

    Also I see that it isn't rated by S&P and van Eyk.

    I'd be reading the PDS cover to cover if I was going to invest in it.

    Cheers,

    Dan

    PS This is general information, before investing seek professional help. Speak to an FPA registered Financial Planner, Accountant or Tax adviser before making an investment decision.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    I had a quick look, but I couldn't find a list of shares they currently hold.

    "Emerging" I take to mean they are looking at smaller companies than the established players like BHP, Rio, etc ? I consider this sector to be very high risk - especially for the smaller players without the diversity of assets to back them up ... you'd want it to be a small satellite I think!

    I'm not saying don't invest ... just saying, I think the risks are very high - I expect the fund to be very high volatility.

    One measure I use for managed funds is what LVR margin lenders are offering on it (even if I don't plan to leverage this fund) ... if they only offer low LVR or none at all, then that usually indicates a fund considered to be too high a risk. I can't find anyone who will lend on WPC0013AU (although that may only be because they haven't had enough demand yet).
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
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    Location:
    Sydney, Australia
    I think you'll find the MER is actually below 1% and there is a performance fee charged for positive performance ... hence the relatively high actual MER.
     
  5. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Sim,

    What a terrible example to put in a PDS...

    You are right, it says 0.25625% (which is 0.25% based with GST RITC of an additional 2.5% rather than 10% gst).

    There performance fee is 18.45% with a watermark which means that they have to continue the growth before they get paid the performance fee again.

    S&P say the fund size is $11.1m as at 31st Aug 07.

    They must believe they can outperform to get paid...

    Their monthly report (http://www.officiumcapital.com.au/funds/reports/2007-08_ERCSF.pdf) shows what they have invested in recently...

    Cheers,

    Dan

    PS The above is general information. Speak to your FPA registered financial planner, accountant or tax adviser before making an investment decision.