Managed Funds Navra fund performance

Michael

Maybe I didn't make myself clear. I agree totally that the unit price will reflect any trading gains and that those will be distributed as income at the end of the quarter, meaning the price would drop. As Sim pointed out, my point was that the undelying value of the asset at the end of the quarter could be the same as at the start of the quarter ie no CG and yet a distribution was still paid.

Gazza

 

Lol. Thanks for the detailed reply Sim.

I only expect minimal growth. Actually I would be happy if my initial investment never went backwards and I just kept receiving distributions

All I want (distribution wise) is enough income to pay interest on loan (i.e, loan for monies invested into NI) and a bit more to help with neg. geared I/P's, which thus far has been fine. It is when I see my initial investment heading south that I start to get jittery. Having said that, I have faith that Steve and the team will get my initial investment back up.

As mentioned, I pay off interest with distributions and besides that, I also make extra payments into my margin loan, trying to reduce that asap.

Whilst a lot of people may not agree with that strategy, what I am eventually trying to achieve is a situation where I have a very low LVR in regards to my managed funds. This will mean paying tax but that does not bother me as I eventually want to live off distributions from mgd funds and also from rents which by then should be showing positive results.

Of course, all of this may change from time to time depending on further investments.

 

I actually work on zero growth. Like Smartypants, I expect the fund to return enough to cover my holding costs as a minimum. I'm confident that the fund will do at least 10%. Because of the drop in the unit price since I purchased, I am sitting on a paper loss of around 30K but my view is as long as I can manage that, it is a non issue. Others might see it differently and I would suggest that maybe this fund is not for them.

 

Just an observation:
Australian Fund

27/09/05 - App. $1.1806 Red. $1.1772
27/09/06 - App. $1.0931 Red. $1.0899

Distrib's
01/10/05 - 5.8c
01/01/06 - 2.7c
01/04/06 - 3.5c
01/07/06 - 5.7278c

Full year dist's - 17.72c

 

LVR

Smartypants,

I agree. Not a lot of people will agree but I intend to reduce mine as well. I was pumping more funds into units and adjusting my margin loan accordingly to about 50percent. I am now reducing my loan which gives me more SANF plus I have those extra funds in the margin loan for other investments if needed. Re the tax situation, you can always buy some trees if the tax allows it next year.

Bob

Bob

 

Yep,

That's what I hope for too. My holding cost is 7.1% based on a mix between the LOC and Margin Loan. All my invested dollars are borrowed. So, the fund needs to return a minimum of 7.1% to cover my holding costs. To date it has achieved this. Since I invested on 14/10/2005 the fund has performed as follows:

14/10/2005 1.0723 application price
27/09/2006 1.0931 application price

plus distributions paid:

Dec 05: 0.027
Mar 06: 0.035
Jun 06: 0.057

Effective ending unit price 27/09/2006: 1.2124 (1.0931 + 0.027 + 0.035 + 0.057)

Return over investment period: 13.06% ((1.2124 / 1.0723) - 1)
Annualised return: 13.7% (365/348 * 13.06%)

Obviously, I'm very happy with a 13.7% annualised rate of return for my investment over my investment time frame to date. This more than covers my holding costs of 7.1% and as such is making me money. Here's where I may differ from most: I don't care how much of this is distribution! If it were a growth fund I could pull the equity out any time I want by selling down units anyway, so for me its all about gross return.

My point in the posts above in this thread was that for "this quarter" the fund has lost me money. I've already spelt that out in detail, but to be precise it has cost me:

03/07/2006: 1.1007 application price
27/09/2006: 1.0931 application price

Distributions paid: zero

Effective ending unit price: 1.0931

Return for the quarter: -0.69% ((1.0931 / 1.1007) - 1)
Annualised return: -2.9% (365/86 * -0.69%)

Obviously I'm not so happy about the return this quarter. It doesn't cover my holding costs as its a negative return. My net return for the period is:

Fund growth: -$3,962
Interest costs: $9,351
Net return: -$13,313

So, in effect, I'd have been $13,313 better off by not being in Navra this quarter. Instead of putting my $9,351 in after tax income into servicing loans to hold Navra I would have been better off putting that money directly towards servicing the shortfall on my negatively geared investments. Had I done so my net worth would have been $13,313 higher through this quarter.

But you've got to take the good with the bad. Just no question that this is a bad one...

Cheers,
Michael.

 

Michael

Totally agree.

There will always be better investments than NI (and worse) and quarters where NI gets outperformed. Hindsight is a wonderful thing. Looking back I should have sold out at 1.16 and bought back in at 1.06 and I wouldn't be sitting on my paper loss but overall if I look at how the fund has performed for me over the 3 years I have been in it, I am well ahead even taking into account holding costs and the capital loss. To me this is what the fund is designed to do for mum and dad investors ie provide an income stream and while it continues to do it, I will keep investing in it (despite what, is as you say, an ugly quarter 0

cheers
gazza

 

All ords closing up on last trading day for the quarter after 2 days up has got to be good for the distribution and unit values. Unit price may end the quarter at 1.10?

MJK

 

I have a watch list set up for the Navra AUS component shares. Should be a pretty good day.
BSL +2.4%
FXJ +4.2%
ORI +4.6%
PBL +3.7%
another 6 up 1%+

 

So at what stage is the fund going to start outperforming! We have been in for a long wait! but with stocks like MBL and WPL at high individual prices it takes a large move to produce much of a trading gain. The fund only seems to be tracking the index.

Those stocks such as AMC, PPX etc dropped out a while ago have in fact had 30% trading ranges over the last six months and produced nice profits for those trading on their own accounts.

Sure you can argue if you had bought more units at a lower price etc. etc. You could have also bought the winning lottery ticket!

At the end of the day it is all about money management and not buy, hold and hope. I am sure every good financial planner would recommend their clients to review their holdings each year and make some adjustments if certain investments are not performing well. It should be no different for managed funds. Remember how much money fund managers lost in the bad old days of the super fund returns being down 30-40%. Yes some came back, some came to level pegging and in fact some didnt do much. They probably evened themselves out to a mediocre return. Throughout all of this your planner was no doubt drawing nice regular commissions and trailers!! This in itself seems to be a good argument for advising clients remaining longer term in an investment - call me cynical!

 

Redrover,

Don't go expecting the fund to outperform the index. Being a trading fund there's quite a lot of friction and cash kept on the sidelines. But it is a good fund for regular distributions. If you seek high absolute returns (ie lots of capital gain and some income) over high income then consider a different fund like Hunter Hall's Value Growth Trust or Platinum International.

By making lots of trading profit and hence leading to positive gearing this is a good fund for offsetting negatively geared property portfolios.

 

Hi Glebe.

Since the NavraInvest Company(as opposed to the Fund) is meant to obtain most of its fees through Outperformance, I would hope it would outperform the Index fairly regularly.

Possibly because of the type of Market we've had over the last few years it would appear(IMHO) there's been a shift in marketing emphasis a little away from outperformance to regular income. For example, I think earlier on the NavraInvest website showed direct comparison between Fund Performance and the ASX200. Also the displaying of actual Performance Fees earned seems to have gone. I guess it's understandable that because of the type of market we've had and the possible negative perception of some investors to a relative lack of outperformance that this was sensible from a marketing point of view.

Increasing FUM will obviously be an important goal as based on simple percentages it will dramatically increase company revenues, but as far as I can see the two are directly linked. Unless there is outperformance the size of the FUM becomes a secondary issue to the company.

 

As a holder of a reasonable amount of shares in the company, I must admit to being a little disillusioned with the lack of outperformance and hence the lack of income earned by the fund. I am also getting a little tired of the argument about ' the market over the last few years hasn't suited the fund'. While that might have been true for periods, there have been times when the market has been volatile enough for me to expect to see some reasonable outperformance. That hasn't happened and the fact the performance comparisons have been removed from the website also worries me.

 

Guys,

You're right about the stated aims of the fund being outperformance. But the ASX200 history is what, 12% or so. You then have Steve Navra saying expect 10% distributions and anything more leads to "a problem of our own creation" and the introduction of tax minimisation products... it doesn't sound like outperformance is the expectation... also when the ASX rises the Navra units don't rise accordingly indicating cash on the sidelines.

 

I think Steve has said at least 10 % . I asked Steve , on the thursday night , " on Back testing , what's the longest period you have a performance of less than 10 % " His comment was that on the back testing they've done , they havn't found a year where there is less than 10 % .

I'd assume the reason for saying 10 % is that if you say 15 % and then get 13 % no one's happy . If you say 10% and get 13% , people are happy .

10 % is a conservative aim .

See Change

 

It would be interesting to hear if this is still an expected minimum for the first 12 months of the US Fund too.

Hope so!

 

I don't have any issues with the stated aim of the fund to return at least 10% income, in fact it has far surpassed that And I have no doubt that it will return at least 10% in pretty much most market conditions. So as a unitholder I am extremely happy. My concern is, as a shareholder, where the outperformance of the index is critical for the company to survive and therefore for all unitholders to continue to receive their minimum 10% pa