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NavraInvest Performance Fee to 26-8-05

Discussion in 'Managed Funds & Index Funds' started by Alan, 29th Aug, 2005.

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  1. Alan

    Alan Well-Known Member

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    I see today that the Performance Fee received after a couple of months of this Financial Year(to 26-8-05) for the Retail Fund has risen to 0.88%. Figure for the whole of last Financial Year was 0.74%.

    Although the Financial Year has a way to go yet, this is certainly looking much better for the Company and shareholders. :)

    Personally I like Performance Fees. It has the Company, Shareholders and yes......Unitholders...... all pulling in the same direction.

    Why Unitholders? Well.....the Company may wind up generating some very acceptable returns to the Unitholders but unless the Company is profitable, it may not be in a position to keep on doing this. :eek:

    I must admit, as a Unitholder, and even more strangely :confused: as a 'consumer', it has crossed my mind a couple of times in the past that I wished that NavraInvest had been showing a slightly better profit return at that particular point in time even though there has been some perfectly acceptable reasons put forward as to why this has been a bit harder in the first couple of years.

    This is a little akin to me wandering into Woolworths to buy my groceries and thinking that I'd like them to be making a nice profit as well as provide my groceries because I like their store/groceries/service. You don't normally do it do you? But, if you thought that because Woolworth's was a bit more profitable today, you may get a better 'return' by way of cheaper groceries, then all of a sudden you have everyone thinking/pulling in the same direction.

    I think this is a really 'healthy' environment for Shareholders, the Company and Unitholders to be in. It means 'Performance' rewards eveyone and Win-Win situations are the order of the day.

    Therefore as a Unitholder, I hope to see NavraInvest get a nice healthy Performance Fee at the end of this Financial Year. Why? I like their groceries! :D



    :)
     
    Alan, 29th Aug, 2005
    #1
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Haha - interesting interpretation Alan.

    As a shareholder, obviously I'm happy with higher performance fees.

    However, as a unitholder, I'm also happy with higher performance fees - since the fee is directly tied to performance, the more I'm paying in fees, the better the performance (or at least out-performance of the ASX200) has been.

    It's like tax. Obviously there are things you can do to (legally) minimise tax, but in simple terms, the more tax you pay, the higher your income must have been! Only someone with a poor understanding of money complains about having too much of it.

    It's one of those glass-half-full/glass-half-empty type of things really.

    For NavraInvest - it's pretty clear - since their fee is truely based on performance, I'm more than happy to pay it.

    I guess I like their groceries too :D
     
    Simon Hampel, 29th Aug, 2005
    #2
  3. Steve Navra

    Steve Navra Well-Known Member

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    Well then . . . you will be very happy to see the performance fee is up to 1.01% as at tonight's close :D

    Yep that correct:
    The fund has performed at 5.60%
    The market has performed at 2.79%

    This puts the out-performance at 2.81%

    So the 'groceries' are double the market at this point.

    Regards,
    Steve
     
    Steve Navra, 29th Aug, 2005
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  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Great - well done Steve (and co) !
     
    Simon Hampel, 29th Aug, 2005
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  5. Alan

    Alan Well-Known Member

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    Good news Steve. :)

    Then I guess with that sort of performance we shouldn't expect NavraInvest to start offering 4 cents per litre fuel discounts......... :D :D







    :)
     
    Alan, 29th Aug, 2005
    #5
  6. Nigel Ward

    Nigel Ward Team InvestEd

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    No...but a 4 cent dividend would be nice :D
     
    Nigel Ward, 29th Aug, 2005
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  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    ... a 4 cent dividend would be a nice start

    ... let's set stretch targets for them - I reckon they can do much better than 4c !! :D
     
    Simon Hampel, 29th Aug, 2005
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  8. Jacque

    Jacque Team InvestEd

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    With this type of performance, I'm happy for you to reinvest those dividends :D
    Well done Steve and team!! Happy days :)
     
    Jacque, 30th Aug, 2005
    #8
  9. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Yeah, so what do people think about being paid out dividends? I got to thinking about this after reading The Warren Buffett Way which mentioned that Berkshire have never paid a dividend to shareholders - which the shareholders are happy about, as they believe (and quite rightly so) that Berkshire can get a better return on those dividends than they themselves can get. I personally think the same applies to NavraInvest.

    Steve, is this something that has been considered? Could it be something that the company will consider if it hasn't already been? I know I'd rather have dividends reinvested because they will grow much faster under the watchful eyes of such a great team than in my hands.

    Mark
     
    Mark Laszczuk, 30th Aug, 2005
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  10. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Mark - are you referring to dividends from the NavraInvest shares, or dividends/distributions from the NavraInvest funds ?

    If the shares (like I suspect) - I'm wondering what you expect NavraInvest to do with the extra money ? Other than bringing new products online, I can't see them needing any more of our capital once they are profitable - might as well distribute the profits to shareholders so that they can invest the proceeds into their own fund holdings and make more profits for the company, which can then be distributed to the shareholders so that they can invest the proceeds into their own fund holdings and make more profits for the company, which can then ... *ERROR: infinite wealth loop detected, output aborted* :D :D
     
    Simon Hampel, 30th Aug, 2005
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  11. Alan

    Alan Well-Known Member

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    Now there's an interesting question. :p

    Stage 1: Establish a trading Company and the Australian Fund.

    Stage 2: Establish a US Fund.


    My surmising only....... but I'd be very surprised if:

    a) Steve wasn't also a very adept chess player, and

    b) There wasn't at least 3,4 or more moves(Stages?) already envisaged. :D


    As always, it will be interesting to see what unfolds next......



    :)
     
    Alan, 30th Aug, 2005
    #11
  12. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Ask him about cards.

    Sim' - I dunno, I guess you're right. Well, I did always intend to put my dividends into the fund anyway, so it all works out.

    Mark
     
    Mark Laszczuk, 30th Aug, 2005
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  13. Steve Navra

    Steve Navra Well-Known Member

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    First the dividend question:

    The major drive is to build FUM (Funds under management) so as to be able to pay the investors a (preferably fully franked) dividend.

    The USA market prefers CG rather than div payments, whereas the Aussie market is very dividend conscious. Fully franked dividends are a dream (no tax) and can be used for cashflow or to reinvest. (Buy more shares in the investment . . . which might answer Mark L's question.)

    From a NI Ltd point of view, the importance of the dividend is related to establishing the share price for a listing of the company beyond the 5th trading year.

    I envisage a dividend in the order of 40c per share which will roughly equate to a share price of between $6-00 and $12-00 per share. (Depending on the franked percentage . . . using the P/E formula.)

    This is what makes the purchase of a share attractive in the first place . . . the potential to receive a return together with the prospect of capital growth.

    Shares currently on offer at $2-50 . . . in light of current performance, very cheap methinks :)

    Disclaimer: Please read the prospectus! http://www.navrainvest.com.au/index.asp?content=sharesale

    Stage 1: Successfully completed
    Stage 2: Currently in progress
    Stage 3: List the Company
    Stage 4: Establish an American company
    Stage 5: Consider the first 4 stages as just the beginning . . . :D

    Regards,
    Steve
     
    Steve Navra, 30th Aug, 2005
    #13
  14. Jayar

    Jayar Well-Known Member

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    Hello, Steve,
    One of the smartest things about this new site is that you get the answers you're looking for, before you have a chance to even ask the questions. :D
    Thanks for that,
    Jayar.
     
    Jayar, 30th Aug, 2005
    #14
  15. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Steve, mailed out application today !

    Looking forward to stage 5. No doubt it will be an interesting journey ... :D
     
    Here_To_Learn, 2nd Sep, 2005
    #15
  16. mikhaila

    mikhaila Member

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    Steve,
    $0.40 per share * 20,000,000 shares = $8,000,000 … :eek: I’d love to see a profit of this magnitude in one of the next 3 years. Do you think it is achievable? If yes, could you list your assumptions?

    M.
     
    mikhaila, 2nd Sep, 2005
    #16
  17. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    NavraInvest has hit $70m of Funds Under Management for the first time - congratulations. Now, how long do we think it will take to reach $100m FUM ? :D

    Given that profitablility of the company will be a function of 1) outperformance of the index, 2) funds under management, (and of course, also need to take into account operational expenses), then keeping an eye on the FUM figure is an important indication as to how income growth for the company will go.

    Let's think about this ... if NavraInvest can manage, say, 2% performance fee each year, then they would require $400m in FUM to make $8m in gross income. Obviously if they managed 4% performance fee, then they only require $200m in FUM to make $8m in gross income. Now I have no idea what the operating costs of the company would be (I could look up some initial figures in the last annual report - but I can't be bothered. Let's say 25% of gross income (I've no idea if that is reasonable).

    So, in our example, let's use figures of $2m expenses, $8m profit, requiring $10m in gross income = $1b FUM @ 1% performance fee, $500m FUM @ 2% fee, or $250m FUM @ 4% fee.

    Of course, 1% performance fee = 2.53% return above the index, 2% = 5.07% above the index and 4% = 10.14% above the index (retail fund).

    So if NavraInvest can do 10.14% outperformance of the index with $250m FUM, then they make their 4% fee, and shareholders get 40c/share profit. When you put it like that, it doesn't sound so impossible !

    Naturally if they only manage to get 5% or so outperformance, then they need $500m FUM - which will just take a bit longer to achieve.

    It's still early days yet - the fund is still too young to be considered by many investors - so I would hope the increase in FUM would accelerate over the next few years as the fund establishes more of a track record.
     
    Simon Hampel, 14th Sep, 2005
    #17
  18. Nigel Ward

    Nigel Ward Team InvestEd

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    Sim

    I think one of the great things about NI's business model is that the costs don't scale up in direct proportion to the FUM. Rather, you don't need much more in the way of staff to run a $1B fund vs a $100m one. Perhaps a few more client service staff, but that's about it. In fact other costs such as brokerage commissions and registry services will I suspect be reduced with added volume discounts.

    As long as we can keep Bill watching the costs it's all upside! :p

    Exciting times! :D
     
    Nigel Ward, 14th Sep, 2005
    #18
  19. perky

    perky Well-Known Member

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    I personally have taken up the offer for more shares.
    I can see this company being a great investment in the medium to long term.
    One thing that is strange though - why more people are not taking up the offer to buy more shares :confused:
    From what I understand the offer is being extended - so not all the 2 million shares have been sold as yet. If I had more money I would buy more !!! :D
     
    perky, 14th Sep, 2005
    #19
  20. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Despite having put a nice sum of $$$ for shares myself unless someone has completed Steve's course, met with with him and his team a few times it's difficult to understand the uniqueness of NI business.

    Personally I wouldn't mind seeing some of the Marketing initiatives been planned.

    Maybe seeing Steve on TV ? :D
     
    Here_To_Learn, 14th Sep, 2005
    #20
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