Managed Funds Navra Introduce Management Fee

Discussion in 'Shares & Funds' started by Alan__, 30th Mar, 2007.

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  1. Simon Hampel

    Simon Hampel Founder Staff Member

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    ... and of course they are completely arbitrary based on the number of assumptions made :rolleyes:

    If you chose a figure for income based on the average annual income from the date of inception (as a different example), rather than the 10% figure + 3% growth that you did choose, you would get vastly different results from your calculation.

    Just gives another indication of another possible cashflow implication :D
     
  2. Alan__

    Alan__ Well-Known Member

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    I simply used those two figures as Steve has often quoted them as being fair and reasonable to use Sim. :rolleyes: Who knows what they will be in the next few years?

    The introduction of a Flat Fee is in all probability now a necessity and should secure the ongoing operation of the company, but no matter how you'd like to dress it up Sim, I find it very disappointing on a number of other levels. I'm glad you see it as positive no matter which way you look at it.

    I have no problem paying Fees however previously we would have being paying 'from the cream'. That at least for now will no longer be the case. There is also now no linkage to performance at all.
     
  3. redrover

    redrover Well-Known Member

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    This raises the question at what point is NI no longer a viable investment. If operating on a margin loan with rising interest rates it will soon not be worth using this vehicle as management fee may cancel out any 1% gain on the margined portion (assuming a 10% return). Relatively speaking, if interest rates were to continue to increase then the fund needs to increase performance by the same amount to stay at level pegging.

    Also if you are invested as a shareholder as well as a unit holder and there has been no return on that portion of your investment you have to factor in lost opportunity costs for those funds put in as a shareholder without any income against them until such time as the fund pays on this portion, and there does not seem to be any projection as to when this is likely.

    If we have another strong year on the markets I think NI will only perform modestly and there may be better investments elsewhere.

    Sim, perhaps you could run a poll on people's confidence and whether they would make ongoing investments in the fund in light of the recent performance and the new management fee. I think this very clearly reflects people's need to continually monitor/manage their investments rather than just letting a fund manager do it all for them!
     
  4. Smartypants

    Smartypants Well-Known Member

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    This is probably going to come across as a bit of a "DUH" question, but anyway :) , for those with funds over $100K in the retail (Oz) fund, do you think it makes sense to transfer the funds into the wholesale fund as management fees will be marginally lower in the wholesale fund?

    Or is there a reason to keep funds in the retail fund.
     
  5. Andrew G

    Andrew G Well-Known Member

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    Thats not how new people to the fund are going to think. Based on the comments regarding performance, it seems they haven't performed well lately at all. What incentive now is there, for a new person to begin investing with them? I understand the fee is quite "normal" for funds. My question is, if performance is shaky, why would you invest with them?

    Fortunately I have yet to invest with them. I believed the idea of charging a performance fee was quite honourable and showed confidence in the product. Reverting back to the "normal" way managed funds operate, this no longer sticks out for any reason and therefore now has to be put back into the pool of other funds where one will be checking performance history. From what I have seen (and yet to invest mind you so how new am I) I can already spot a heap of far better options.

    What does everyone else think??

    Andrew.
     
  6. artgul

    artgul Well-Known Member

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    Hi Alan, I guess that at the end this is a commercial transaction for all the partties involved. If at any point, any one of them is not satisfy it will opt out. The company needs to make $ otherwise will opt out. If the fees rise to the point it doesn't make sense them unit holders will opt out.
    Very simple.

    Rgds,
    artgul.
     
  7. Glebe

    Glebe Well-Known Member

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    You will have to sell your units in the retail fund, and buy into the wholesale fund. This is a CGT event. You will have to do the maths based on your individual tax situation, and the expected length of your investment. It's definitely conceivable that it's in your interests to switch.

    You need over $250k to invest in the wholesale fund.

    Another option, depending on how big your pockets are, could be to receive all your retail distributions in cash, and invest them into the wholesale fund. Kinda like recycling them from one fund to another. But you need to have enough cash for the initial investment...
     
  8. Alan__

    Alan__ Well-Known Member

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    Hi artgul.

    Yep......no disagreement from me there.
     
  9. voigtstr

    voigtstr Well-Known Member

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    Which other options are better? What are the pro's and cons of the other options you've researched?

    Cheers
    Simon
     
  10. Simon Hampel

    Simon Hampel Founder Staff Member

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    Haven't performed well ? How do you figure that ?

    Let's look at some facts ...

    The following is the percentage change in unit price from the first day of each quarter to the last day of the quarter (before distribution is calculated). This shows the raw performance of the unit price for that period. The other number is the cents per unit distributed for that quarter.

    These are based on the Wholesale fund, but the retail fund will be similar.

    2003Q3: 5.24% 3.2
    2003Q4: 0.95% 3.1
    2004Q1: 3.73% 2.2
    2004Q2: 1.98% 1.6

    Distribution for 03/04 FY: 10.1 c/unit

    2004Q3: 5.95% 3.3
    2004Q4: 11.81% 3.6
    2005Q1: 0.32% 4.5
    2005Q2: 2.48% 3.6

    Distribution for 04/05 FY: 14.9 c/unit

    2005Q3: 10.66% 5.9
    2005Q4: 0.47% 2.8
    2006Q1: 4.67% 3.6
    2006Q2: 2.18% 6.4

    Distribution for 05/06 FY: 18.7 c/unit

    2006Q3: 0.02% 2.2
    2006Q4: 7.30% 3.3
    2007Q1 5.20% 4.5 (unit price as of 29/03/07, with estimated distribution - to be confirmed)

    Distribution for 06/07 FY to date: 10.0 c/unit with one quarter to go.

    I think that's a pretty good showing ... if the current market volatility continues, I'd hope for another 4-5c/unit for a total of at least 15c/unit for the year.
     
  11. Simon Hampel

    Simon Hampel Founder Staff Member

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    Better options for what ?

    What is your goal ?

    If you are looking to maximise your growth and have a risk profile that makes your comfortable with very high levels of gearing (including internal gearing within a fund) ... another fund you could consider is something like the CFS Geared Share fund ... it invests in largely the same types of stocks that NavraInvest invests in, but takes a much more aggressive approach - and uses internal gearing to magnify its returns.

    The performance of that fund has been excellent ... but it also has pretty high levels of volatility - so caution is required when using a margin loan.

    I hold both Navra AUS W/S and the CFS W/S Geared Share Fund.

    It comes down to your goals and profile as to what is "better".
     
  12. TryHard

    TryHard Well-Known Member

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    Seems like words taking on a life of themselves here :eek:

    The fund has an objective - it generates income for its unitholders. Surprisingly the company would also like to earn some money.

    Um, sorry ???? :eek:

    Haven't performed well compared to what ? Their last year performance ? The index ? Leaving money in the bank ? Bio-tech or uranium stocks ?

    I still keep receiving income deposited every quarter more than what I pay in interest ?

    If I told you Angelina Jolie wasn't gorgeous, would you go and repeat that as well ? :p


    ------------

    They have the choice of charging a performance based fee (which was a key point of difference compared to other funds) or charging a management fee. They have just exercised their right (which every existing unitholder acknowledged by reading the PDS and applying to invest) to charge a management fee.

    I would have liked them to stay performance based too, but they might like the company to stay afloat to continue to invest on our behalf, do you think ? From my limited experience 1.5% fee is typical. So what if they earn $3M p.a. from the existing funds invested ? In comparison the unitholders will have earned $27M (ie. the remaining 15% approx). Would the unitholders rather leave it in the bank, get charged only $20 per month and earn nothing ?

    If you can find an investment that suits you better, go invest in it ! :confused: That's what I'm going to do (IF and WHEN I find an alternative that looks better on paper) ... There is limited penalty for withdrawing from NI, that's another one of its advantages over some competing funds.

    But like everyone else here, I'd find it useful if people would post * what * is a better option and * why * and show the * historical returns * and weigh up the * risks * so we can all discuss apples with apples.

    Like everyone, the supporters and knockers included, I think NI should perform .... and if it stops performing I'll no longer keep dough in there. I think the Navra bashing for bashing sake is doing fine on other forums - maybe try to keep InvestEd focussed on facts (nicely done Sim' :D )
     
  13. TryHard

    TryHard Well-Known Member

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    PS if you are so highly geared that an extra 1.5% hit completely changes the complexion of your investment, I reckon you wanna be checking your risk profile anyway ????
     
  14. Alan__

    Alan__ Well-Known Member

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    Hi Carl.

    Yes......this to me is a little like having to put down the family dog because of health issues. You're always going to be sad and disappointed but unfortunately, at this time, it was something that had to be done. The company simply can't go on for years without income and the health issue of the company has to be paramount........it doesn't stop you from being disappointed from other angles though. :(

    Oh......and if you ever say Angelina Jolie isn't gorgeous........you should be put down. You'd have lost your mind! :D
     
  15. TryHard

    TryHard Well-Known Member

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    Hey Alan

    I agree, and sympathise with anyone who's disappointed, but then 'business is business'. I just reckon people need to be careful not to draw a conclusion that NI isn't worthy of consideration as an investment vehicle just because they change a fee structure which they are entitled to do. Even though (I assume) the company's bottom line hasn't been as healthy as it should, its performance and returns to investors have been exactly what they would have been with our without the fee - I mean their trading methods and gross results aren't likely to change (less the 1.5% of course!) - ie. MORE than acceptable in my book. Hopefully this will be more like giving the family dog a vitamin B injection and have it running up and down the fence barking at the neighbours.

    I know - even though I was trying to make a point I felt bad even as I typed that :p
     
  16. Alan__

    Alan__ Well-Known Member

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    Yep.......I've been very happy with the performance of the Oz Fund too Carl.

    I guess as one of those that played around for many hours with the old Beta version I guess I just find it a shame. Maybe that's a better word than disappointed. But as you say, business is business.....
     
  17. Andrew Allen

    Andrew Allen Well-Known Member Business Member

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    A case of expectation coming around to meet and greet reality re: performance fee in this case.

    Even those funds that do actually have a better mousetrap seem to charge the 2 + whatever outperform (2+20 often) from what I have seen amongst the hedges.

    Makes the 0.2% odd MER of the index funds look a bit sweeter no?
     
  18. Glebe

    Glebe Well-Known Member

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    Andrew

    You love index funds and good on you, I like them too. But they don't suit everyone for every occasion. They won't offer 10%+ income in a flat year.

    The Navra funds 'promises' to do this...
     
  19. Andrew Allen

    Andrew Allen Well-Known Member Business Member

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    Promise away.

    Yes I like index funds, it's not love quite yet but you never know how these things might develop.
     
  20. TryHard

    TryHard Well-Known Member

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    Glebe

    I can't find that anywhere - what page in the PDS ? :D