Managed Funds Navra fund outperformance of the S&P200 - #2

Tropo, Thought so! That's why I gave you the benefit of the doubt. See, you ARE a good bloke!! (Maybe all the smilies in your posts alluded me to that fact too )

Alan, that was part of my thinking and a potential risk with DCT. In trading directly myself in the past I've been guilty of selling my winners early and holding my losers too long. That's amateur stuff I know but a common mistake for new-comers. I now understand trailing stop losses etc so would hold my winners for longer. My fear is that I'm not sure what rules DCT uses to determine sell signals. I read in their latest quarterly report that they have sold down their holding in BHP. I would have thought that they should be increasing their exposure to this sector and not decreasing it? I think that somewhere between this point of yours and Glebe's about limited buying opportunities is the truth. I'm a Demand Manager by profession so all of my training and experience to date is in predicting the future. I use complex algorithms in Advanced Planning and Scheduling (APS) systems to look at history and project it forward so I know a little bit about trend lines and standard deviations etc. I'd love to know more about DCT because I reckon I could help tweak the algorithm's design a bit but I guess that's one I'll need to put to Steve one day over a beer. I'm not sure if he even uses the trend when determining buy/sell points, or whether he uses standard deviations to determine likely volatility around that trend line... BTW, this isn't predicting so much as it is reacting! Trend and Standard Deviation is entirely a product of "historical" analysis.

Thanks Nigel, I needed a giggle.

Cheers,
Michael.

 

"Tropo, Thought so! That's why I gave you the benefit of the doubt. See, you ARE a good bloke!! (Maybe all the smilies in your posts alluded me to that fact too )".

Michael,

Try to convince my wife...hahahahahaaaa...
Keep $miling !!.

 

I guess it depends from where and when you look at it as to whether it's a disadvantage or an advantage...........

 

Michael,

The thing that concerns about your personal situation is not the questions you are asking (although asking Steve to predict what might happen in the future is a bit much!), rather your continual statements along the lines of 'I missed out on $x because the fund didn't outperform the index'. Which has then led on to such questions as 'Should I pull some money out of Navra and put it somewhere else?' I feel from your posts this second question is directly related to the so-called 'loss' you experienced in the quarter.

*Warning* may step on some toes here. No apologies though!

To me when I see/hear these sorts of things, I believe they are coming straight from emotion - usually fear. Most of the time that's pretty accurate. If it wasn't coming from fear, people wouldn't worry about it. When you start questioning your portfolio because of one quarters returns, that's - in my opinion - definitely coming from fear. Like the point I raised in the Buffett post, not even WB outperformed the index every single time. In fact, sometimes he 'underperformed' by as much as 20%!

Michael, if you believe in Navra like you say you do, then trust that over the long term it is going to outperform. Focussing so much on a single quarters returns doesn't do you any favours, ride with it. It's all part of investing. You say you've done lots of due dilligence and you 'seem' to be confident in Navra's ability to perform long term, so other than the valid questions you have, what's the issue?

If we could all pick the right funds or shares to be in at the right time, we wouldn't be here on the forums, we'd all be on a beach somewhere in the Bahama's.

Mark

 

" If we could all pick the right funds or shares to be in at the right time, we wouldn't be here on the forums, we'd all be on a beach somewhere in the Bahama's".

Mark,

What about Saint Tropez or Monaco/Monte Carlo ???
PS. Going over there 2 months from now.
I'll send you a post card !!

 

Hahahaha no worries!

Personally though, I'd rather go to Marseille then stop over in Oregon on the way home.

Mark

 

Mark,

I think you've finally got it!

Accept mediocrity and that's what you'll be left with, expect abundance and, well... time will tell.

No fear in me old boy, just a downright drive to be the richest man in Australia! And I make NO apologies for constantly pushing the envelope!!

Cheers,
Michael.

 

Grief ......................!!

Okay some answers:

The fund IS NOT suited to “straight up” market conditions!! (Simple answer )

1) In applying the NavTraDE system to the past 13 years it can clearly be seen that the system easily exceeds the index over the period.
2) If we look at the previous years 4 through to 13 the system out performed the index by a substantial percentage. (approx 10%)
3) If we look at the last 3 years the system underperformed the index . . . as per exactly our current returns for the 3 years.


Why is this so???

The NavTraDE system algorithm is based on a standard volatility range for blue chip shares and based on the long term growth figures of the market.

If the market (XJO) underperforms the long term average, then NavTraDE will beat the index. (Substantially!!)

If the market (XJO) matches its long term average, then then NavTraDE will beat the index. (by approx 10%)

If the market (XJO) outperforms its long term average, then then NavTraDE will NOT beat the index. (as is currently the case.)

Since we started the fund the market has performed at close to double its long term average!!! As Alan H correctly points out, we actually are selling on the way up so we hold increasing proportions of cash…………….. and cash (which is very safe!) can NEVER match the market returns we are currently seeing. This is why there will be a slight underperformance relative to the index when the market is this (very unusually) high. (Relative to long term trends.)

In times such as we are currently experiencing you will get many who might be expressing dissatisfaction at NOT matching the index……………….. but I suggest that they take a longer term approach to share trading:

When the market is very strong:
You might not match the Index, but you are still making good returns. (And locking in distributions)

When the market is average:
You are beating the index as well as locking in distributions.

When the market is weak:
You are “creaming” the index as well as locking in distributions.


What offers the best protection?????
We all might have a different view about this . . . .the view (and hence the structure of the algorithm) of the majority of my clients is that they wish to preserve their capital as far as is possible and so they wanted the greatest protection during the worst market conditions!!

Currently during the BEST market conditions that I have ever seen in Australia over a sustained period, my clients are happy with an approx 15% per year return, which we are averaging since inception…….. together with the high levels of income receivable on a quarterly basis. (The view is that this is far in excess of property returns!)

The market WILL turn around at some stage!!!!
At that time, these who are now expressing concern at not beating the index will be VERY GRATEFUL when they are so protected during a weak or declining market. (Where you could be losing actual capital)

The correct answer might be to structure your share fund correctly!!

EXAMPLE:
I gear my share portfolio to 50%

Therefore I have received 15% X 2 = 30% less cost of gearing half the amount. (8/2%/) – 4% per year.

My return therefore on actual dollars invested has been approx 26% pa since the inception of the fund. (I am satisfied with this )

I hope this clarifies the questions?

Regards,

Steve

 

Thanks !

Steve

I would like to say I am one of the investors very happy with the returns. I am comfortable with the conservative nature of the fund - and I understand 'conservative' usually means lower returns. It also means I might still have some dough in a few years. My own foray into direct shares was nothing short of a disaster.

I don't think a managed fund is suited to someone who wants complete granularity and to aggressively manage their portfolio through a looking glass while comparing the "what if's" against historical performance of other investments (although more power to those who have the time and inclination to do that - personally that would send me to ulcer city).

I think sometimes by the time you have worked out the ins and outs of a duck's behind, the duck has swum upstream. I'd rather be confident the duck knows what its doing and where its going, than everything about what makes the duck tick ;-)

For me, I'm sitting back to enjoy the ride, or swim upstream, as the case may be.

Cheers
Carl

 

Nice answer Steve. Good to have you back.

Off topic:
Personally, I think if the type of questions Michael, Gazza etc. have been asking are what we can expect as part of the overall tone of this Forum.......then I think this will be a bl***y good Forum.

Having been around a few of these Forums over the years, you certainly get your reasonable share from the libellous/defamatory/rude/ridiculous end of the spectrum and similarly you can get those that never bother to ask VERY relevant questions to their personal situations and hence either remain ignorant or have the wool totally pulled over their eyes.

This Forum is still in its embryotic stages, but if we continue to see respectful, intelligent questions met with honest, direct answers such as this I think its got a bright future.

Ok.....back to topic:

 

Steve,

Awesome answer, and EXACTLY what I needed to know! My patience and persistance has paid off it would seem. That answer is precisely why I kept the faith and kept asking the questions!!

Your description of the funds "intent" as well as a raw bones description of its "methodology" paints a very clear picture of what to expect from it in the long term. I'm glad I'm in this fund and glad I've selected the Navra group as my financial partners. Emphasis on "partners", as I see the relationship as more than some temporary contractual fee-for-service one. I believe the group genuinely cares about its clients and their financial future.

THAT is what separates Navra from other planners/funds/forums, and THAT is why I keep waving the Navra flag from the highest rooftops I can find.

Thanks mate, and I hope this thread and all the excellent discussion that ensued helps many others than myself to get a better handle on what differentiates this fund and Navra in the market.

Cheers,
(a very contented) Michael.

PS My gearing is 100% effectively. Every dollar is borrowed with 60% LOC and 40% leveraged through a margin lender. So my holding costs are 7.1% pa and any return above this is an infinate% return on my zero funds invested...

 

Well said Michael - very closely echoes my own sentiments.

As a novice managed fund/margin loan investor I really value the quality of the "expert" responses on this site and won't hesitate to re-enlist after my 6 months is up.

Jenny