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US Fund and exchange rates

Discussion in 'Managed Funds & Index Funds' started by Smartypants, 29th Nov, 2006.

  1. Smartypants

    Smartypants Well-Known Member

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    In light of this thread, is anyone else getting a tad concerned about their holdings in the U.S Fund?

    Whilst early days, surely the surging Aussie dollar is going to effect overall value of the fund.

    Is it time to maybe start thinking about transferring funds in the US fund over to the Aussie fund (or possibly another fund) or is this the time to be patient and hopefully ride it out?

    What do others think?

    P.S. Maybe the hefty drop in the Dow Jones yesterday presented some good buying opportunities for the US fund.
     
    Last edited by a moderator: 29th Nov, 2006
  2. perky

    perky Well-Known Member

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    Yes, I decided on Monday to get out of the US funds (and then that night Dow went down 158 points :eek: ). I know of one other person who is more intuative than me who got out several weeks ago.
    The exchange rate is my main worry as well.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Hopefully, based on what was discussed at the NavraInvest AGM this morning - they will announce some changes to the way they trade the fund which will minimise the currency impact going forward. This does not involve hedging, but rather holding everything in AUD and only converting to USD to actually perform the trades. This means that the cash holdings will be in AUD, and not subject to currency fluctuations.

    From what I understand, the trades will be calculated in AUD, meaning that a trade won't be considered profitable unless the AUD price of the share has gone up.

    I feel a lot more confident about the funds ability to make regular income going forwards.

    Not sure when this will come in - but I think it's a good step.
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Oh, and I'm still holding Navra US fund ... down 1.76% at the moment, but it's a small part (around 1.6%) of my portfolio and I'm not adding to this position until I see a consistent increase in value.

    Platinum Japan is performing a lot worse at the moment !! I sold down most of my holdings there a while back too - still holding about 1.6% of my portfolio in Platinum Japan - will gradually buy back in if it starts to show a sustained positive momentum.
     
  5. Smartypants

    Smartypants Well-Known Member

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    I will more than likely keep my investment in the US fund as well.

    Part of the reason being that I am unsure of where else to park those funds if I was pull out, i.e, do I invest in LPT's, Commercial Property trusts....:confused: , all a bit confusing for me.

    If I was to get out of the fund, where do I stand with my margin loan? Would I have to repay that portion back first, then invest in another fund with a new margin loan or can I sell out of one fund into another keeping the margin loan as is?
     
  6. Tropo

    Tropo Well-Known Member

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    "Platinum Japan is performing a lot worse at the moment !! I sold down most of my holdings there a while back too - still holding about 1.6% of my portfolio in Platinum Japan - will gradually buy back in if it starts to show a sustained positive momentum"

    It seems to me that you are on the way to become a .... trader one day :p
     
  7. Tropo

    Tropo Well-Known Member

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    "(and then that night Dow went down 158 points )"

    Perky,
    Dow went down because bonds rallied. It was one day wonder I guess :rolleyes:
     
  8. Tom&Don

    Tom&Don Active Member

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    Gold, and Gold related holdings.

    Gold.ax, Merryl Lynch International Gold Fund, check out The Australian Gold Investment Portal

    I like the look of GoldLink IncomePlus - Home

    Why do I say Gold? Im shifting a larger % of my asset base into Gold. I dont like what I'm learning about the USA, and I've started shifting my portfolio mix to a more defensive stance. I dont mind not getting an income off my gold holdings, its purely a SANF thing. If the USD turns to crap and the AUD follows at least I will have something going the other way.

    I hold about

    24% Cash (Offset accounts)
    12% Shares (Predominantly Navra Retail)
    60% Property (Blue chip)
    04% Gold

    Im intending on holding 10 to 15 % in gold related assets.

    Thats not counting Super. All my super has been shifted into a fairly even split of Navra Retail, Global Resources and Platinum International. This is still a bit aggressive and im considering switching Platinum into something else, with 0 exposure to USD. Something in Euro or Yen.
     
  9. Insight

    Insight Brisbane Buyers Agent

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    Jim Puplava loves the gold theme. He recently did a series on '5 ways to own gold' on his financial sense news hour.
     
  10. Tropo

    Tropo Well-Known Member

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    "..... with 0 exposure to USD. Something in Euro or Yen"


    A bit of history...

    In terms of international economic the $US is the main safe haven currency. This was proven quite well during The Asian crisis of 1997/98 when panicked investors dumped the crisis stricken currencies in favor of $US.

    As you know, $US is no longer backed by gold, but if you consider size of the US economy it's still leading financial market.
    Although challenged by Euro and Yen, the $US is still the world's financial standard and after 2nd World War the other currencies were virtually pegged against it.
    The $US was devaluated by approx. 60% between 1985/1995 in a relief effort for American exporters and in an attempt to re-balance the trade deficit, and as you know $US is still around.
    Estimated market share of the major currency in 2000 : USD 43%; EUR 20%; JPY 11% GBP 6%, others 20%.
    :cool:
     
  11. PJA

    PJA Member

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    Hi All,
    Long time lurker, first time poster. This thead drew me in because I have a small holding in the Navra Dow fund.

    I don't trade MF's short term or watch the prices daily, my idea is to let the bus driver drive the bus and keep the MF in the bottom draw. That said I had a look at the Navra Dow v's the Navra XJO which I also hold, over the last 4 months.

    Since the April/ May debacle, the Dow fund has actually performed better than the Aussie fund ie was around 1.01 now 1.007, the Aussie fund was 1.16 - now 1.114 - a slightly bigger decline. This ignores the income distributions of course, but for me these are bottom draw investments and I will let the driver do his job
     
  12. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Actually you cannot compare unit prices without taking distributions into account - the comparison is meaningless since unit prices drop as a result of distribution. The more a fund distributes, the more the unit price drops.

    The only accurate method for comparing the overall return of two funds is to simulate an investment of $X in each fund over the period, reinvesting all distributions.

    Using this method calculating from May 1st 2006, the Navra AUS Retail fund has performed around 5.2% to date, while the Navra US fund has performed 2.3%.

    In that same time, the AUD has gone up just over 3.0% against the USD - thus making it difficult for the US fund to make money in AUD terms.

    It would be interesting for the sake of comparison to see the performance of the Navra US fund in USD terms over that period ... from what Steve and Bill suggested at the AGM yesterday, it has actually been quite good - but we unfortunately lose that money in conversion back to AUD at the moment.
     
  13. PJA

    PJA Member

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    Sim,

    Agree with all that. What I look at is in two partsl unit price growth and distribution. I can only see me beconing seriously rich via unit price gains. That probably wont happen via the Navra XJO because it basically seems to be an income fund.As this thread is about the Navra USA fund - I have some and they are in the botton draw and will stay there for quite some time

     
  14. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Actually, if the Navra funds can regularly produce 15%+ returns and you reinvest all your distributions and leave the money there for "quite some time" ... I think you are well on your way to becoming "seriously rich" :D

    Margin loans are a good way to accerlerate the wealth ... even a conservative 50% LVR will significantly enhance your returns.
     
  15. gad

    gad Well-Known Member

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    ......... or losses :D
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Nobody I know invests to make a loss ... so it's moot :p :D