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Macquarie Alps 6

Discussion in 'Managed Funds & Index Funds' started by Cheeks, 5th Jul, 2006.

  1. Cheeks

    Cheeks Member

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    Location:
    Karratha, WA
  2. gazza

    gazza Well-Known Member

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    Cheeks

    I also saw this fund yesterday. I have just put some money into 2 Macquarie Funds (Equity Enhanced, the Peter Spann one and the Newton Multi Strategy). I like the idea of using OPM with a fixed interest rate and capital protection, working on the principle that given Macquarie's track record and the fact that they generally have their own money invested in these funds, that they should at least be able to return the 7% or so , that the interest is costing me. Therefore very little downside for the investor.

    Did you see what the indicative interest rate is for the ALPs fund?

    cheers
    Gazza
     
  3. Cheeks

    Cheeks Member

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    Indicative rate is 7.95% fixed for the term.
     
  4. Cheeks

    Cheeks Member

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    Hi

    Has anyone else received the PDS.

    I'm really interested to hear peoples opinons on the knockout events.
     
  5. Tim

    Tim Well-Known Member

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    Cheeks,

    I would be interested in your and other views as well. I downloaded the prospectus, because initially I thought looks good, but the following things concern me:

    1) Assuming you borrow for a minimal $50k financed investment at 7.95 percent (the prospectsus only lets you borrow 75%), the MAXIMUM return (assuming NO knockouts) you could get is close to 10% per annum (refer to prospectus but bear in mind this amount is not compounding, so the $50k capital return is worth less after 7.5 years due to inflation). This equates to getting about $38 318 back in interest (less tax on this net profit). I got 10% by taking the estimated best case scenario in the prospectus and detracting the 7.95% interest.

    2) The prospectus suggests a 'high likelihood' of at least one knockout. Lets assume there is one per every second year, so 4 knockouts from 80 stocks. Again if we assume we borrow all the funds, then the average return per year is quoted 9.7%, less the interest at 7.95% means your $50k has been locked up for 7.5 years barely keeping pace with inflation and in fact really this would be a terrible investment.

    3) Lets assume now that there are maximum knockouts (7) and so worst case scenario. You have lost around 6% per annum in interest, or around $3000 per year, and your capital at the end is returned with less real value than when you started.

    On the above scenarios you should probably take into account the guaranteed 12.5% in the first years, so about $6250 in the first year.

    The other thing is due to an adjustment event the stocks can change - you really have no control whatsover over any of the stocks.

    Let me know your thoughts. Maybe it is a good investment but it seems prone to risk for not much return for me.

    The other thing to consider, say the traded securities are worth far more than $10 in 7.5 years, that might not feel that good on maturity!

    Any feedback from anyone?

    Tim
     
  6. Cheeks

    Cheeks Member

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    Now that sums up my thoughts.

    A single knock out event really impacts the performance and no growth was a concern.

    I was really struggling to see the value in the fund, gues it's not for me.

    Thought this would have gotten a few more posts as it's about an income fund..

    Thanks
     
  7. Tim

    Tim Well-Known Member

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