Join our investing community

Navra !st quarter distribution?

Discussion in 'Managed Funds & Index Funds' started by lorrimer, 3rd Aug, 2007.

  1. lorrimer

    lorrimer Well-Known Member

    Joined:
    4th Jun, 2006
    Posts:
    193
    Location:
    Brisbane, Queensland
    This current environment should be a really good test for the Navra trading system. I know there is still a long way to go this quarter, but it will be really interesting to see if they can still manage to pay a distribution if the market continues it's present volatility.
    If the unit price holds up relatively well and they do make a payment, it would be a great endorsement that could potentially attract many new investors.
    So what do people think, 1st quarter distribution yes/no ?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    I think it's far too early to even take a guess - a LOT can happen in the markets in 8 weeks.

    I wouldn't doubt that there will be some distribution - but how much is impossible to guess at this point.
     
  3. Sean

    Sean Member

    Joined:
    23rd Aug, 2005
    Posts:
    24
    The Navra fund thrives on volatility..... it will be really nice if the market drops further so the fund can keep buying in and then get some sharp upturns with profit taking so the fund can sell out to make profit increments on the spikes..........
     
  4. Simon

    Simon Well-Known Member

    Joined:
    17th Sep, 2005
    Posts:
    520
    Location:
    Newcastle
    They can only keep buying for so long until they run out of cash.
     
  5. perky

    perky Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    300
    Location:
    Sydney
    I would say 1% - though the fund may well be in negative territory at end of September. Its a bit of a shame that they were not holding more in cash when this correction started.
    I was expecting a small one this quarter anyway (after the huge one last quarter), and advised my dad to keep it safe after that last distribution.
    I will be looking at buying more units pretty soon, its getting close to 10% (well after today it will be) correction !!
     
  6. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    I hope its not too much...

    They distributed a fair bit of my capital back to me on the last distribution and now my LVR is out to 70%. I'll probably have to re-invest the next distribution anyway just to keep the LVR at that level. So, the smaller the better, given its taxable income. That's the downside of an income fund I guess. If it were a growth fund I'd just leave it all in there and not wear a CG tax bill this quarter. But as its income and it distributes it, I don't have that luxury.

    Ah well, here's hoping for a tiny distribution this month.

    Cheers,
    Michael.
     
    Last edited by a moderator: 6th Aug, 2007
  7. Chris.R_WA

    Chris.R_WA Well-Known Member

    Joined:
    7th Aug, 2006
    Posts:
    113
    Location:
    Perth, WA
    Hi guys,

    Don't Navra have discretion over the quarterly distributions? I know they have to distribute all realised profits at the end of 4Q, but can they retain some earnings as growth for the other quarters?

    This would help with the LVR situation (mine has just broken the 71% barrier:eek: ), but I suppose some people also rely on the regular distributions to fund other areas of their portfolios. A tough balancing act I would think...

    Chris
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    If you get a large distribution, you have two choices to help manage your LVR ... either reinvest those distributions once you get them, or else deposit the cash into your margin loan. This second option will have a more significant benefit, given that you get 100% credit against your LVR for cash, whereas you'll only get 70% or 75% credit (depending on the lender's max LVR for Navra) if you reinvest.

    Navra wouldn't hold back distribution just because people may have trouble managing their LVRs - they'd only hold it back to smooth out the distributions for the following quarters (assuming there was enough to hold !!).
     
  9. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Sim,

    Nice! So how does one go about putting cash off the margin loan. I can't see that anywhere online, only my LOCs etc are online. And, once deposited, can it be redrawn when the market recovers and the LVR isn't as stretched?

    Cheers,
    Michael

    PS I'm with ANZ Margin Services.
     
  10. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    No idea about ANZ ... with LevEq or St.George, you just transfer the cash in via BPay. You can then request a drawdown (up to your max LVR) in the future if you need to.

    You'd need to check with ANZ as to whether they allow this.

    This will of course (in most cases) decrease your loan balance, and thus your interest - unless you've pre-paid all of your interest costs (I only pre-pay about half of my interest).

    You do have the option with some lenders of depositing cash into a CMA, and using that as additional collateral (thus decreasing your LVR), but without decreasing your loan amount. St.George allow this as an option.
     
  11. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    It's the same with pretty much all lenders (well, the ones I deal with anyway).

    Mark
     
  12. MichaelWhyte

    MichaelWhyte Well-Known Member

    Joined:
    5th Oct, 2005
    Posts:
    798
    Location:
    Sydney, NSW
    Cool!

    That's the plan then. I was considering parking it in the LOC portion of the loan to offset the interest anyway but putting it in the ML portion offsets a higher interest rate and has the added benefit of reducing (or at least maintaining) the LVR.

    Thanks guys,
    Michael.
     
  13. gazza

    gazza Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    214
    Location:
    Canberra
    Colonial is the same ie you have the ability to pay down your margin loan at any time using BPAY. Your margin loan limit remains so you have the ability to draw down again at a later date.

    Interestingly when I raised this technique with Steve in May, his view was he would recommend using spare funds to buy more units in NI as a way of reducing your LVR as opposed to paying down your margin loan.

    From my perspective you definitely get a faster reduction of your LVR by paying down your margin loan and it seems to me to be the way to go in this current market where quite a few of us are getting close to or are over the 70% LVR mark and possibly heading to a margin call if the market dips by another 5-8%.
     
  14. DaveA

    DaveA Well-Known Member

    Joined:
    19th Feb, 2007
    Posts:
    617
    Location:
    Sydney, NSW
    do you know which companies this is with Sim?

    As far as i understand, paying down your loan balance will reduce your deductable debt and if you redraw it later for personal use it will be non deductable, so if you could place it in the CMA for the time, interest deductions would be affected...

    Comsec dont have such a bpay arrangement but you call them and request funds to be transfered into the account...
     
  15. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    St.George have such a facility allowing you to place funds in a CMA - and you earn interest on that money while it is sitting there too.

    If you do get one set up, make sure you contact them to verify how it will work - there are two options, one which sees any cash deposited to that account automatically swept into the margin loan, and the other will hold the cash as a separate investment in the CMA ... double check to make sure you have it set up the way you want it to operate before depositing cash !!!
     
  16. DaveA

    DaveA Well-Known Member

    Joined:
    19th Feb, 2007
    Posts:
    617
    Location:
    Sydney, NSW
    ahhh thanks sim, i was of the opinion it was an CMA offset account, which would save you interest but not earn it...

    i do wonder if there is such thing around like that...
     
  17. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    Sim, will the navra fund keep buying all the way down. Do they stop when they run low on cash?
    If the market starts being volatile again (regular up and down swings) thats the best condition for the trading system isnt it. So once this correction is done with the system would be selling shares again and generating nice distributions for us?
     
  18. Alan

    Alan Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    603
    Location:
    Sydney
    I'm pretty sure they stop when they run out of cash. ;)
     
  19. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    I think they'd stop when they have no more cash available. It is possible for the fund to be 100% invested (although naturally, they'd hold a small reserve back for daily cashflow requirements).

    Yes, once the market swings up again, they will start taking profits.
     
  20. redrover

    redrover Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    131
    So.... if they run low on funds before the market bottoms, and the market continues lower or then drifts for quite a while, there would be no return. If the market recovers but some of the stocks do not reach the previous buy-in points, then again the fund is not making anything on those and the returns (if any) would be a long time in arriving. Hypothetical, but can we count on Mac Bank getting back over $100??? hehehehe

    This all brings in the question again of it being an "income" fund, not necessarily a growth fund. Need to pay the LOC and margin loan interest rates at some time.