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Navra Cash Holdings

Discussion in 'Managed Funds & Index Funds' started by MrDarcy, 27th Sep, 2005.

  1. MrDarcy

    MrDarcy Well-Known Member

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    About a month ago I heard Navra funds were about 30% in cash due rising market. Since then, the market has been sort of exploding some more so I expect that cash holding is higher now. Any ideas ?

    I like the thought of a higher cash holding, less exposed to market corrections :rolleyes:
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    It's not about less exposure to market corrections - it's about more buying opportunities when the market does correct !
     
  3. MrDarcy

    MrDarcy Well-Known Member

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    Ditto :p

    10 character padding goes here
     
  4. Alan

    Alan Well-Known Member

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    Hmmm........I would have thought it was a bit of both....




    :)
     
  5. Gameboy

    Gameboy Member

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    Pretty sure I read in one of the commentary reports that the fund was at 30% cash months ago and obviously the market has run quite a distance since then.

    There might be a 30% cash cap in a bullmarket. This makes sense imo otherwise you are basically prejudging where the bull run might end and not only run the real risk of underperforming due to a large cash holding, but also missing a large part of the uptrend.
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You are right Alan - I was being a bit facetious :D
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I don't know how NavraInvest managed their cash levels - part of the "secret formula" I'd suggest. However, you are correct in that high levels of cash to work against the fund in a strongly rising market - the same way that they benefit the fund in a strongly falling market. It's both a risk management tool, and an opportunity tool.

    I remember when I was in the Navra offices a month or so back and Steve showed me a spreadsheet with the to-date performance figures ... on the sheet they identified how much cash was currently being held, and even how much that cash holding helped/hindered the fund (they did this for all the shares being held too). At the time, with the market going so well, the cash was actually seen as a hinderence - it had a (slight) negative overall impact on the performance of the fund.

    They seem to have the forumla about right though - the market has basically gone straight up since then, and the NavraInvest funds are still outperforming the ASX200 ... so it doesn't seem to be that big a deal. The really big benefits come with the inevitable corrections - high cash holdings mean many more buying opportunities, which amplify future profit potentials.