Join our investing community

Navra Aus Retail - Performance

Discussion in 'Managed Funds & Index Funds' started by Alwayslooking, 18th Dec, 2007.

  1. Alwayslooking

    Alwayslooking Well-Known Member

    Joined:
    11th Jun, 2006
    Posts:
    79
    Location:
    My World
    Hi All
    I am new to this and am in the process of jumping into NAVRA fund.

    On Navra's website it states that income generated is 15.5% over the last 3 years. However, I have read some posts here where perhaps it is more like Navra is making 10%+ pa.

    I am a little confused is 15.5% pa after fees etc.

    If it were closer to 10% pa I don't think it would be worth bothering as Margin Loan is 9.5%.

    I am probably missing something, can someone please clarify this for me.

    Cheers, AL
     
  2. ffc1883_1996

    ffc1883_1996 Active Member

    Joined:
    12th Sep, 2007
    Posts:
    31
    Location:
    Melbourne, VIC
    Given the fund's rather large cash holding, I was wondering if the performance may actually improve in a higher interest-rate environment.

    Just a thought.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    People refer to 10% just as a conservative figure based on Steve Navra's comments about his expected minimum in most markets. In reality the return AFTER fees (but before tax) has been much higher - but we've also had strongly rising markets the past few years.

    Looking at http://www.navrainvest.com.au/index.asp?content=distribution - you'll see past distributed income each year since inception being 10.58%, 16.17%, 17.24%, and 18.53% ... which is where they get the 15.5% average from.
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Are you referring to the higher returns on the cash component from higher interest rates on their cash account ?

    I would think the performance boost from that would be negligible overall ... 1% increase in interest rate only leads to somewhat less than 1% overall performance boost based on the cash holding ... for a fund aiming for 10%+ returns, that's nothing to get too excited about ... although I guess every little bit helps.
     
  5. Alwayslooking

    Alwayslooking Well-Known Member

    Joined:
    11th Jun, 2006
    Posts:
    79
    Location:
    My World
    Hi Sim
    thanks for reply.

    I thought due to Navra's strategy of trading performance of the fund is not dependent on a rising market? Is this correct.

    Cheers, AL
     
  6. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
  7. redrover

    redrover Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    131
    "Outperform the market" can be a bit irrelevant especially in a down trending market, when NI loses less than the Index so yes it does outperform with less on the downside but it does not then produce much income in that phase. I dont know that it has ever outperformed the market on a yearly basis since inception!!
     
  8. samaka

    samaka Well-Known Member

    Joined:
    30th Sep, 2007
    Posts:
    308
    Location:
    Sydney
    I also don't think we've had a bad enough year to truly test Navra's performance.
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    It has redrover - almost every year since inception ... I'd have to check which years and by how much, but it has regularly outperformed the index - not by much, but it is still outperformance.
     
  10. redrover

    redrover Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    131
    I thought last year NI did about 20% whereas the market did in excess of 23%?? Year 1 at just over 9% did not outperform the Index!
     
  11. JIT

    JIT Well-Known Member

    Joined:
    2nd Dec, 2006
    Posts:
    240
    Location:
    Melbourne
    Minus fees, could you have done better with an index fund?
     
  12. bundy1964

    bundy1964 Well-Known Member

    Joined:
    22nd Dec, 2006
    Posts:
    351
    Location:
    Adelaide, SA

    Most likely an index fund would of done better overall but Navra has a higher cash flow than an index fund, important if you need to show that to a lender and/or cover negative cashflow.
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    This is a good point actually - one that I hadn't really been taking into account. Lenders do like to see cashflow when it comes to assessing servicability (you'll need a couple of years of distribution statements to show history), whereas equity is of no interest to them at all.

    Naturally the downside is the tax-ineffectiveness of said income ... but it all depends on your strategy, situation and goals.
     
  14. tailcat

    tailcat Well-Known Member

    Joined:
    18th Jun, 2007
    Posts:
    96
    Location:
    Yeppoon
    Westpac only need to see it on your previous tax-statement. However, I do not know what formula they use when calculating serviceability.

    Tailcat
     
  15. coopranos

    coopranos Well-Known Member

    Joined:
    11th Oct, 2006
    Posts:
    498
    Location:
    Perth
    ...??
    Assuming the index is the ASX200
    In 03/04 it UNDERperformed by 5.1%
    In 04/05 it OUTperformed by 1.4%
    in 05/06 it OUTperformed by .7%
    in 06/07 it UNDERperformed by 2.9%

    Therefore its BEST year of underperformance is worse than the combined total overperformance.
    (That is going from the first year the fund actually turned a profit, otherwise it's like saying my dead dog outperformed the index because he didnt lose any money).
    After fees & tax the picture would be a bit nastier again, and if we were talking the ALL ORDS index it is a whole lot nastier!
    I am not saying Navra does not have a very valid use, it certainly does, but it definitely isnt a fair comparison between Navra and an index fund - they are 2 different animals for 2 different purposes, but it is still incorrect to say it outperforms the index. it loses less money in the down times because it holds cash, but that is more than lost in the up markets.
    If you are comparing to an index fund, I think the only valid comparison is "what would a dollar invested X years ago be worth today".
    If you bring in the other reasons for Navra (serviceability, cashflow, etc), it isnt a valid comparison.
     
  16. Insight

    Insight Brisbane Buyers Agent

    Joined:
    24th Sep, 2006
    Posts:
    229
    Location:
    Brisbane
    If you actually understand a little bit about AIM trading and the whole seeking alpha issue then to think you can get regular outperformance from a single mechanical system applied over one market, well good luck to you sir.

    As Cooprano's mentioned a valid comparison might be to compare to an Index fund, that's a dollars in pockets comparison as compared to worrying about what the ASX200 does, which you aren't really as you don't get divs from that measure.

    I would love the idea that as a fund manager I can swim in the ASX200 accumulation pool and track myself against the ASX200 (- divs), which gives me a 3-4% headwind to push my fees up, to not outperform on this criteria would be more of a challenge.
     
  17. Alwayslooking

    Alwayslooking Well-Known Member

    Joined:
    11th Jun, 2006
    Posts:
    79
    Location:
    My World
    Thanks everyone for great feedback.

    I have decided in the new year to invest in Navra starting with around $50K LOC/$50 ML ($100K). I plan to capitalise the LOC and ML.

    I would use the income to service negative shortfall or non-tax deductible debt and depending on performance would pay out the interest on the ML only.

    Cheers, AL
     
  18. JIT

    JIT Well-Known Member

    Joined:
    2nd Dec, 2006
    Posts:
    240
    Location:
    Melbourne
    Oh boy, a newbie 100% leveraging in the current higher interest rate environment and capitalising interest, into an income fund that regularly underperforms and charges fees for the privelege, and to service repayments on non-deductible debt...hmmm...:rolleyes: :eek:
     
    Last edited by a moderator: 23rd Dec, 2007
  19. JustB

    JustB Well-Known Member

    Joined:
    15th Jul, 2007
    Posts:
    47
    Location:
    Sydney, NSW
    Hi AL,

    You mentioned in your original post that you are quite new to all this. You now state you are planning to enter Navra, 100% leveraged, not re-invest the distributed income, and capitalise the interest.

    Do you fully understand the implications of capitalising interest, LVR's, margin calls etc? Especially when applied to a predominantly income focused fund like Navra, as opposed to a growth focused fund? If not, read the articles on this site, related posts on the forums, and ask questions to clarify anything that isn't clear.

    What you are proposing sounds very risky, unless you have a sufficient amount of cash at hand to bail you out if the fund doesn't consistantly deliver your anticipated returns. Have you got a contingency plan in place?

    JustB
     
  20. JIT

    JIT Well-Known Member

    Joined:
    2nd Dec, 2006
    Posts:
    240
    Location:
    Melbourne