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Fund Performance

Discussion in 'Managed Funds & Index Funds' started by Here_To_Learn, 12th Jan, 2007.

  1. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Just noticed on the navrainvest site that the performance across both the wholesale and retail funds has dropped substantially from approx. 7.5% in December.

    Just curious if anyone knows why ? :confused:
     
  2. Glebe

    Glebe Well-Known Member

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    distribution?
     
  3. Here_To_Learn

    Here_To_Learn Well-Known Member

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    I think it may be the volatility of the market in January ...

    I have not seen the performance drop so much before after a distribution. :confused:
     
  4. redrover

    redrover Well-Known Member

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    Cannot be distribution on its own. It was not big enough. Funds under management have dropped by $4m approx. from $171.4m on 29 Dec to $167.73m on 10 Jan. Allowing for those reinvesting their distributions it should have gone up a bit!!

    Just out of interest how do they calculate FUM. If people invested $10m and the market goes down and their investment is now worth $9m, which is the more relevant figure? The original figure was $10m under management so that should still stand albeit showing a 10% loss!

    It would seem that since the end of 1st qtr with FUM of $160m there has been very little new investment in the fund if it is now only at $167.7m. I dont know how much was reinvested after end of 1st qtr, but seems there is little interest from outside existing holders in the fund unless it starts to outperform.:(
     
  5. Here_To_Learn

    Here_To_Learn Well-Known Member

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    I think this is one of Steve's challenges ... slowly, bit by bit meeting with people and selling the benefits of investing in the fund as well as other offerings ( Financial planning, structure, etc... ). This however takes time.

    A better approach may be to get buy in from larger style investment houses cashed up. My understanding is that this is still part of the plan.
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Nope - distributions are accounted for in the performance figures.

    The drop is due to recent falls on the stockmarket ... the market is down significantly from recent highs, and is very volatile at the moment. This is typical for January.
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    No - if every unit holder reinvested their distributions, the FUM would remain unchanged when distributions were calculated, since the total dollars in the system doesn't change.

    If everyone took their distributions as cash, then the FUM would (in theory) drop by the size of the distribution.

    I'm pretty sure it's just the current total value of all assets (including cash) currently invested by the funds. If cash is paid out because of a distribution, the FUM would drop by the amount paid out.

    FUM shows the current value of the assets held. If the value drops, the FUM drops with it. You can't manage money that no longer exists (due to a decrease in value).

    Don't forget that the total FUM figure includes the US fund, which has not been performing well. You need to look at the AUS funds in isolation.

    According to the management at the AGM, there continues to be strong new investment in the Australian funds. Unfortunately there isn't much from institutional investors yet - but they are hoping to address that on an ongoing basis. You'd need to ask NavraInvest directly exactly how much in new investment there has been so far this financial year.

    I wouldn't read too much into the change in value of the FUM ... there are a lot of variables which make up that number, and people may even pull money out of the fund for other purposes (such as funding a new home etc).

    I'd just focus on the actual performance figures and what they mean.
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Yup, and this was mentioned at the AGM. It is part of the plan - but they will need extra resource to achieve this.

    It also should get easier as the fund gets older and has a longer track record of consistent returns.

    I suspect that if we have an extended down market and the Navra funds manage to perform well (as we hope they will), then the institutions and platforms will see it as a good defensive investment, and it will become much more attractive. We'll have to wait and see.

    Also, it is not an easy thing for a small fund management company without deep pockets to get the attention of many of the larger institutions and platforms ... many of them simply look at who has this rating or that report, and those ratings and reports come at a pretty steep cost ... so unless you are prepared to fork out the money to get rated or reported (and can afford to do so), you can often be ignored by many institutions and platforms. Even if you do pay the money, there are no guarantees ... so it's not necessarily money worth spending anyway.