Managed Funds Navra distribution

Is this to hold up the Unit Price and would it have been more benefical to move to the Warrants pre OR post distribution this 1/4 (moot point now I guess, but just interested)?

 

Distribution:

Subject to auditing the distribution will be 2c per unit.
At closing unit price this represents 2.06%

The market ended -15.5% for this quarter
See: Stocks end worst-ever quarter | smh.com.au

A very good distribution result in the circumstances!

As Sim mentioned the fund needs the market to move up from the low for profits to be realised.

We are very strongly into banks /financials; this sector has been worst effected during the quarter.

BIG up-night in USA, especially in financials . . . watch us go today

Regards,
Steve

 

We are looking forward to the ripper distribution in July Steve!

MJK

 

I can't help but think it was convenient to say the fund had nothing to do with the market when it was underperforming, but now that it's outperforming (but still losing total value) it's all of a sudden relevant to compare it to the market.

I'm not disparaging the fund per se, but I can't stand fund managers who all of a sudden change tact to make their performance look better. Now they're mentioning the market when for the past 5 years they've condemned such comparisons.

Roger Montgomery at Clime is another manager doing the same thing. I think it's just such a sell out.

I'd like to see someone be honest for a change and say:

"Look... we said our fund would make positive total returns in bear markets and even better returns in volatile markets, but it didn't end up quite being the case. Nonetheless, we've learnt from our mistakes and as the fund's focus, we're still committed to paying distributions while working out a way to preserve capital. Although we may be doing better than the market, we are still losing money. But! We are still working hard to bring you the best total returns possible."

I think honesty breeds credibility.

 

Allison, I like the sound of your planet, one day I would like to visit and say hi

It would be really nice if things worked that way... but the amazing thing is that perception is reality in fund management and perception and marketing are even more powerful than the numbers.. Quite an amazing concept but I believe it to be true

 

A good distribution result for me is when I make a profit and pay myself a portion out of that and keep the rest for capital compounding.

When I lose money and decide to pay myself an X% dividend (I have complete control over how big or small X will be) then I wouldn't call any possible value for X a good result unfortunately.

When I'm losing money trading I cut my expenses and try and do anything possible to avoid drawing on my account (paying myself a dividend), if I need to I will take money out of my account but it's a regrettable situation to be in as the math of compounding is working against you to get back to scratch.

 

Allison
I think honesty breeds credibility.
I agree entirely with what you have said.
NavraInvest would have retained more credit by stating the position as we all knew it to be anyway.
Steve has such a loyal and grateful support base, myself included, that an honest self appraisal would only confirm what people know about the man, whilst we all continued to bank our 15% returns for the last four years.
An annualised 10% outperformance(net of fees) in this financial year proves that NI can deliver what it says.
I would much rather have missed out on the 25-30 % returns over the last three years and have a smaller loss, than be in the position where people chased returns that could not realistically be maintained and then take a 25%hit when margined to the hilt, which has just happened.
Regards

Denis

 

Alison says: "but still losing total value"

Distributions for the past 4 quarters are as follows:

Paid
July 2007 8.03%
Oct 2007 2.50%
Jan 2008 3.00%
April 2008 2.06%

Total paid out since 1 July = 15.59%
Performance since 1 July = -6.03

So the portfolio is negative at this point in time (paper loss) but the investors have received 9.53% more than this decrease.

I think honest criticism breeds credibility.

 

Income Funds

Further to my comments above I would like to make the point that it seems the purpose of an income fund is being misunderstood.

The very reason we stopped and still continue to NOT show performance against the index on the website is because of the barrage of negative comments by members about paper losses / gains compared to the index.

All the while we have continued to show the INCOME returns each year.

The fund has continued through good and bad years to average above 15% income each year.

The purpose of investing in an income fund is to produce income.

I merely portrayed the outperformance for the quarter so that members could appreciate that a 2.06% income return in a market environment where the index is -15.5% for this quarter, is a good INCOME return, especially where there has been no significant upward movement where realised profits could be accrued.

Sincerely,
Steve

 

Steve
Whilst l have been critical of NI plenty of times, I agree that the purpose of income funds is still not understood by many.
It is no different to owning an investment property that drops 10% in value during a normal market cycle, but the tennant still pays the same rent, and the investor still makes the same income. Providing it is a good investment, the value will return and history tells us that it will increase in time.
Regards

Denis

 

Could be worse..

MFS fund freezes distributions

• Wed, 12 Mar 2008 | The Australian Financial Review | Paddy Manning

• More than 11,000 investors trapped in MFS's $770 million Premium Income Fund will no longer receive interest payments after the stricken Gold Coast-based fund manager decided to defer distributions "until further notice".

I read of one retiree in the story who relies on this fund for his pension

 

Distributions March 2008

From the Navra website..............
Distributions March 2008
RETAIL
2 c.p.u.
1.85%
WHOLESALE
2 c.p.u
1.85%
AMERICAN
0 c.p.u
0%

 

Yes correct.

Thought I would point out that 2c/0.9693 = 2.06% based on unit price at the end of the quarter.

Auditors base it on unit price at the beginning of the financial year when the unit price was 1.080 (Accounting practise.)

I stand technically corrected then as per previous posting where:

Distributions for the past 4 quarters are as follows:

Paid
July 2007 8.03%
Oct 2007 2.50%
Jan 2008 3.00%
April 2008 1.85%

Total paid out since 1 July = 15.38%
Performance since 1 July = -6.03

Regards,
Steve

 

Denis it is definitely different.

If the value of your house falls 10% the tenant is not going to pay you less rent. If your trading capital falls 10% then your ability to generate an income is impacted. If we assume (a large assumption) that a trader is always going to make a healthy profit every year then you might not even notice the difference, but it's there.

 

Earlier in this thread Steve Navra mentioned how the fund was heavy in Banks and Financial shares. This is something that has troubled me for some time, especially given the current weakness of this sector, and the likelihood of continuing weakness.
I wonder why the Fund is heavy in Banks and Financial shares. If it is because of their defensive nature, then perhaps it is time to review this philosophy and balance out the sectors away from this weak area.
I wonder if there is scope to change the ratio invested in various areas, is it regularly reviewed, or set in stone?

 

All I will say is that is great to see Steve back posting again

 

Hi, seaview,
Perhaps someone else can answer your concerns better, but have a look at the Navra website below..
It may answer some of your questions.

Welcome to NavraInvest Limited - Funds Management

Jayar

 

Yes, great to have you back on the forum Steve. I sincerely hope you stick around this time for the benefit of most of us.
I do have one query, at the cocktail party you said that 3% was pretty much locked in at that stage. So I am very curious to know what the final distribution would have been, had it not been for your clients switching to warrants? There was a large amount of volatility in the weeks following the cocktail party, so would that 3% have become 4% or more?
Thanks

 

It wasn't all about clients switching to safety in warrants, although this did have an affect.

We work on a FIFO (first in first out) principle, so given that there was a lot of volatility we were buying and selling heaps, which is excellent for the fund.

However, we were selling stock purchased 'first in' that was purchased 6 to 12 months ago, when the market was hitting it highs. These sales although profitable against average cost of the portfolio, can and in cases did realise trading loses! (which reduce the distribution)

This is NOT bad for the fund, because although it does lower the distribution, it also lowers average holding costs of the portfolio, which is good for future growth / realised profits.

We are not selective in trying to 'time' the buys and sells (that would be predictive) and so sometimes it is 'just in the timing'. Had the quarter ended on the night of the cocktail party, the distribution would have been ~ 3%.

After the increase over the last few days if the quarter ended tomorrow, the distribution would in fact have be at ~3% again!

What a difference a few weeks can make

The most important thing to understand is that whatever profit is realised or lost in the trading, is held or released in capital value.

If an investor is cashflow stressed as a result of the 1.85% distribution instead of a 3% distribution, then simply redeem the missing 1.15%.

The only difference will be in how the 1.15% is taxed!

Also if you feel that you are then 'losing' 1.15% of your capital, well the capital value has increased by 5% in the last 2 days alone!!

Hope this explains it a bit better?

Regards,
Steve

 

Hmmmmm we bought heavily into the banking sector when this sector was about ~30% to 35% down. This represented EXCELLENT buying value and this is realising enormous value as the market is improving.

Sentimental weakness in a sector is just that . . . sentiment!

I appreciate that the banking sector has / is experiencing stress, but not to the point of a 35% decrease compared to a market decrease of 15% to 20%.

This will probably prove to be our most profitable sector going forward over the next 6 to 12 months, certainly based on the past few days . . . time will certainly tell.