Managed Funds NavraInvest article from the Financial Standard

Good article, lets hope there are more of them like that in the future
One thing wrong with the article - they say "no return above the target then zero fee" as quoted by Bill - without even mentioning what the target is !!! Shame they dont mention the target is the ASX200. People who have no idea about NavraInvest may then sit up and really take notice.

 

'Driving the differentiator even harder de Steiger says "One day we would like to be able to charge no fees on negative returns".........'


What does this mean? Isn't this what is happening now.........

 

'Driving the differentiator even harder de Steiger says "One day we would like to be able to charge no fees on negative returns".........'

No, if the fund loses less than the index, then it outperformed the index and there may be a fee for that performance. It may not be nice to be charged by a fund for them losing your money, but at least they will try and lose less than the index

Also, what do people think of proposed fee changes just announced ?

I have no problem with performace fee based quarterly (thought it was anyhow ), but what about the 0.3% cost recovery ?

 

No. Say the index did -10% in a year and the fund did -5%. There would still be a fee charged because the fund had performed better than the index by 5% despite still having a negative return.

To my mind that's a fair thing. While nobody likes a loss, the skill of the manager has saved you 5% in this scenario - so the fee to my mind is fairly earned.

My 2.2c worth.
N.

 

Agreed.

My $0.02c worth

Bob

 

Yep....yep......yep......

Sorry guys.......that was my understanding too (which is fine......I'm still happy to pay for outperformance ). I guess I just misunderstood the statement with my quick reading of it........

 

Hi MrDarcy.

For those who may not be aware, this involves an existing right that NavraInvest had to charge the costs and expenses of administering the Funds to the Funds themselves. To date NavraInvest seems to have absorbed these costs directly however they now intend to exercise their right to charge the Fund for these costs from 15/1/2006. Current costs and expenses are in the order of $250,000pa or about 0.3% of FUM.

How do I feel about this?

Well......'ideally' it would be nice if the Fund didn't have to absorb these costs but to be honest I can see some benefits.

I'm obviously not in any position to comment on the company's financial status but as a Unitholder I have enough faith in the company investment philosophy that I'd like to see the company succeed into the future.

While increasing Funds Under Management and an improving Performance Fee should see the Company be a viable ongoing concern, I wouldn't have necessarily thought the market over the last 18 months or so provided 'optimal' conditions for a high Performance Fee and hence income to the company.

In that light, a 'tightening up' of certain operational aspects and a reduction in overheads would probably be good management practice to put the company in a stronger position for its next expansion phase.

It would be nice to think that once FUM and Performance Fees increased that this decision could be reviewed and the current situation reintroduced, however I wonder really how likely/practical this would be?

In addition to Unitholders, there is another Group that obviously needs to be considered here and that is the Shareholders who put up the cash a few years ago to allow this company to get established and then be operational for the last few years.

I don't think I've ever seen a 'registered charity' number following the name NavraInvest and therefore quite rightly these shareholders will want to see a strong, tightly run company that delivers them a good Return On Investment and has as few overheads as possible.

If the charging of these Fees does ensure the company is in a strong and viable position going forward then this should be a good thing for Unitholders and Shareholders and therefore I guess I can live with the fee introduction.

 

"beyond style"...Does that mean Bill and Steve have poor dress sense?

Great article.

N.

 

As a sharehouse in waiting and unitholder, I am pulled both ways. But, I prefer to be investing in, and shareholder of, a well managed and profitable company. If that means proper cost recovery, I'm OK with that to reasonable limits. Seems you are too !

 

Actually, one point that could be clarified by the Company......

With regards to the change, is this $250K for the Retail and Wholesale Funds combined or is it $250k for the Retail Fund and a similar additional $250K for the Wholesale Fund? I'm presuming it's combined.....

Also, what would be the cost implications be for a US Fund?

 

We initially invested in the Retail Fund, but also purchased shares when they became available as we believed in Steve's concepts and philosophies. Our investment is quite small at this point in time but we want to be there for the long term so agree with the above comments.

The charging of costs back to the funds seems to be a sensible business decision and we have no problem with that. With the returns we have received so far (over a period of time where the market conditions have not been ideal for the Navra system) we are more than happy with this proposal especially if it improves the viability of the company for the long term.

 

I too am a shareholder and a unitholder (in both retail and wholesale funds) and I agree with this proposal. I think we're all in this venture because we all see the huge potential in the NavTrade system over the medium to longer term. It is in our own interests to ensure that the funds get bedded down and that NavraInvest continues to operate as a viable entity well into the future. The possible alternative (albeit a remote one) is that the company runs out of operating capital and, presumably, the funds are wound up and we'd all be forced to park our hard-earned in other funds which will hit us for more fees than we're ever going to incur at NavraInvest. Of course, shareholders have the most to lose - we'll have done our money entirely!
Unit-holders are profiting nicely out of the funds and I believe it's reasonable for ALL beneficiaries to contribute to the running costs of the funds. And, for what it's worth, I'm also in favour of the quarterly charging of the performance fee - pretty well for the same reasons as above.
It will be interesting to see how much capital is raised in the latest share offering - I'm not sure it's exactly been swamped but happy to be proven otherwise.

BSB

 

I am just curious ...

Who actually up to now paid the 0.3% ?

 

Here_To_Learn,

I believe that up to this point, NavraInvest Pty Ltd has been covering the running costs out of the startup capital put in by the foundation shareholders way back in late 2002.