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US Fund / AUD Related

Discussion in 'Managed Funds & Index Funds' started by Smartypants, 1st Nov, 2006.

  1. Smartypants

    Smartypants Well-Known Member

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    Hi.

    Just noticed that the US fund is only showing 0.8% growth for this financial year so far. Not that long ago it was just over the 4% mark.

    Does this tie in with the rise in the Aussie dollar?

    Thought that the recent high of the Dow Jones may have seen the fund doing a bit better.

    Still all a bit foreign to me (mgd funds that is), but hopefully the good people at Navra can come up with some sort of solution to counter when the AUD performs well.

    Don't think the US fund is performing as well as it was expected to. I realize the fund is still in it's infancy, just hope it starts to improve a bit.
     
  2. Tropo

    Tropo Well-Known Member

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    Does this tie in with the rise in the Aussie dollar?

    It looks like it ......You may check attached AUD/USD daily chart.
    AUD/USD is on its way to hit 78c (possibly 80c). Currently 0.7740

    :D

    PS

    I cannot attach the chart for reason unknown.
     
    Last edited by a moderator: 1st Nov, 2006
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Try uploading it to the photo gallery and linking to it here to display directly in your post.
     
  4. Tropo

    Tropo Well-Known Member

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    I can not do it as I have a file .doc not a picture to upload.:eek:
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    You could take a screenshot of the doc and upload that as a picture ?
     
  6. Tropo

    Tropo Well-Known Member

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    I am trying - but does not work.
    Anyway ... not to worry....;)
     
  7. Tropo

    Tropo Well-Known Member

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    AUD/USD

    "Blood, Sweat and Tears" :p

    I uploaded chart to the Photo Gallery. Below is the link. I hope it will work.:eek:


    [​IMG]

    oops, does not look good!!! Sorry but I tried!
     
    Last edited by a moderator: 1st Nov, 2006
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    So, since the beginning of July, if I read it correctly, it looks like the AUD is up about 6%, while the Dow is up about 7%. I assume this would be enough to cancel it all out ?

    Of course, if the AUD dropped from here back down to 55c like it was a few years back, we'd all be ecstatic !!
     
  9. Nigel Ward

    Nigel Ward Team InvestEd

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    I'm no economist but I just can't see that happening.

    In fact I went to a presentation by Bill Evans (Westpac chief crystal ball gazer) at the AVCAL conference and he thinks the AUD is chronically underpriced and should be around US90c+ mark :eek:

    The big question with all the economists at the moment seems to be whether the US housing sector decline will cause a big drop in consumer spending (which is about 71% of US economy apparently) or not. So far the so-called "wealth effect" of a reduction in house prices hasn't filtered through to reduced spending...

    I'm rethinking my current geographical asset allocation... :rolleyes:
     
  10. Alan

    Alan Well-Known Member

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    It will be interesting to see if this type of unhedged International 'Income' Managed Fund winds up being suitable for those expecting regular +10% annual income?

    The fluctuations due to currency movements would appear(so far at least) to make expected returns very hard to predict and therefore possibly much less 'regular'.

    If the exchange rate began dropping tomorrow then hopefully the return would improve. However, it would appear the Return in Australian Dollars could be great or dismal independent of the actual trading performance.

    I guess we'll see in another four months whether +10% is achievable.......
     
  11. Tropo

    Tropo Well-Known Member

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    So, since the beginning of July, if I read it correctly, it looks like the AUD is up about 6%, while the Dow is up about 7%. I assume this would be enough to cancel it all out ?

    Well ....almost - but if Dow moves back and AUD/USD keeps moving up - it will not be good for US Fund.

    Difference between last low (06 Oct 06) at 0.7413 and todays intra (0.7740) is approx. 327 pips (points) so this may help you determine percentage difference between AUD/USD and Dow.:p

    Of course, if the AUD dropped from here back down to 55c like it was a few years back, we'd all be ecstatic !!

    You should be ecstatic IF this happens, and if Dow stays where it is today ..:D
    AUD/USD created double bottom at 0.4814 (Apr 2001-Sep 2001) and from this level moved up and hit today 0.7740 (intraday) and may well hit 78 cents or even 80 cents in the nearest future.

    So you may wait long, long time before you'll get ecstatic !!.;)
    Until than BE ...:cool:
     
  12. Tropo

    Tropo Well-Known Member

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    "
    Join Date: Jun 2005

    I'm no economist but I just can't see that happening.

    In fact I went to a presentation by Bill Evans (Westpac chief crystal ball gazer) at the AVCAL conference and he thinks the AUD is chronically underpriced and should be around US90c+ mark "


    Nigel,

    I would NOT trust economists.:rolleyes:

    PS - Bill Evans was a very good jazz pianist. I am not sure if current Westapc chief is related to him........:p
     
  13. handyandy

    handyandy Well-Known Member

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    I certainly expected a 10+% return from the US fund. I agree that the US/AUD situation may be a major cause for its lack of performance. But the bottom line is 'its got to make money'.

    To that end I have pulled stumps.

    Cheers
     
  14. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Hey handy ... the fund has only been going for 9 months now ... bit soon to claim it can't do 10% for the year isn't it ?

    I'm not saying it will necessarily do so, nor am I saying you should stay in it if you aren't happy with it ... but to me, 9 months does not make an annual return ?

    I've only just invested, so I'm happy to give it a while yet. It's currently less than 2% of my managed funds portfolio - so no biggie either way.

    Not getting any buy signals for it right now though, so no more money going in for now.
     
  15. handyandy

    handyandy Well-Known Member

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    Hi Sim

    I am not claiming anything.

    Bottom line is I hope it does make the mark but it will have to do it without my money invested.

    This is an 'income fund' and for it not to return an income just doesn't meet my criteria.

    Cheers
     
  16. Smartypants

    Smartypants Well-Known Member

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    The other thing I was thinking was that if/when we get another interest rate rise/s, for those of us that have borrowed to invest into this fund, this will even hit us harder if this fund shows no or little growth.

    Obviously, the rate rise will effect any borrowed funds for investing but as Handyandy says, this fund is supposed to be an income fund. If borrowed funds are approx 8% (after interest rate rise/s), a quick turnanround of the US fund would be desired to keep our heads above water.
     
  17. gad

    gad Well-Known Member

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    Would very seriously cinsider cutting my losses & ditching this fund (American) next time it gets up there a little (if).
    $100k of Margin loan 6 months ago & worth a little less than the start value now (dist's were re-invested).
    Interest is just over $4k for that period & IR about to go up again. Predictions are that the Aussie $ will get higher as well.

    I have no doubt that as soon as I do that it will swing the other way :)
    Could someone else give that a go first he he
     
  18. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    But if it goes up, wouldn't you want to think about keeping it ? :p

    I say, if you are going to bail, bail now, and make the money work for you.

    Otherwise, just let it be and give it 3-5 years to do its stuff.

    Either way, you do need to make a decision and stick to it - otherwise it's going to bug you endlessly :D

    I must say that with a larger, more diverse portfolio, I'm much more relaxed about the individual performance of my funds ... I'm quite happy to sell down some of the worst performing ones to invest further in the funds that are hot right now. However, my approach is to only sell when I need the money to avoid going over my personal LVR limit when gearing-up.

    Indeed, unless my fund portfolio grows by around 0.8% tomorrow to give me enough buffer for my next investment, on Monday I'll be redeeming part of my worst performing fund at the moment (Platinum Japan), and reinvesting the proceeds into one of my better performing funds (to be determined tomorrow, but probably Platinum Asia).

    I won't sell out of Platinum Japan completely (I'll only be selling enough to fund my next investment), and I'm happy to buy back in to Platinum Japan if it turns good again.
     
  19. handyandy

    handyandy Well-Known Member

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    Hi Sim

    Funny you should mention Plat Asia as that is exactly what I have in mind.

    By the way, don't know how quick they will redeem funds but its taking a week to receive money from Navra (through trustee etc).

    I think the whole 5 year investment period is a load of melarky. If you are not paying financial advisers, missing out on paying the 4% upfront commissions etc, then why the hell shouldn't you trade them like any other instrument. Why would you want to leave your money in an underprefroming asset unless its to simply not realise losses.

    Its all about the velocity of money. The more I can make my money work and increase in value in the shortest possible time the better.

    In retrospect the US fund became somewhat complicated with the additional twist of the exchange rate. Obviously the fund is gaining but the continual shift in the exchange rate is erroding the value of the investment.

    Cheers
     
  20. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Also consider Platinum European - it's been a steady performer of late too.

    I would usually expect it to take a week or so to get the money in the bank. I'm hoping that swapping between two Platinum funds might be a bit quicker though (no money need be transferred between accounts).

    Well it depends on your attitude towards the ability of fund manager to add value.

    My argument for not "trading" as such is that a fund manager should be given the opportunity to take a long term view on their investment strategy and not expected to perform every quarter. This is especially true of fund managers like Platinum, which specialise in what they call "neglected" companies ... which may take a while to come good. As such, I'm generally happy to leave my money where it is for a longer period of time to give them the chance to really shine.

    If you look at the historic graphs of most of these high return funds, they often have short periods of low or negative growth followed by longer periods of very fast growth ... it can be worth hanging on through the down period to make sure you get the most of the up period. Since you never know when the up period will start - you miss out on some of the early gains by waiting until the growth has started.

    Ironically, that's exactly what I am doing to a degree - waiting until the fund shows an upswing in momentum before I put more money in ... but my explanation is that I'm already holding funds - I'll just add to it when it's obvious things are moving up, using some of the money from a fund that's currently in a down period. I'm not selling out of a fund completely to move to a new fund.

    I think the Navra funds do also exhibit a bit of the same behaviour ... when the markets (or some of their larger holdings) are down a bit, they will probably underperform as the fund buys into a falling stock ... and the benefits won't be realised until later once the market has recovered and is moving up strongly again, at which time the fund should strongly outperform due to buying cheaper. However, I think the trading cycle is generally a lot shorter than the timeframes I would expect the Platinum funds (for example) to need to realise their high profits ... so I think there is justification for expecting the funds to perform reasonably consistently (which is the way it has been marketed anyway).

    Sure, I agree. The big question is ... are you really better off selling out of fund X to invest in fund Y ? You won't know until Z years down the track, and there are many other variables which start to come into play the longer you leave it to compare. I actually question whether chopping and changing is the best strategy.

    There's the standard financial planner's presentation which shows data of having picked the best performing fund over the last 12 months to invest your money in - moving it each year to whatever performed the best. The returns are generally worse than if you had just left it where it was. The reasoning being that a fund that performed well over the last 12 months may well have "done its dash" and the investments it currently holds are now fully valued (or even over valued), and there is less growth to be had going forward. Buying in at the top of a fund's profit cycle will limit your returns. It's also unusual for the best performing fund this year to be the best performing fund next year as well.

    It would be interesting to go over some of the funds I'm invested in and play some scenarios on holding versus moving investments to see which option would have performed the best.

    Yes, that was always the biggest difference between the US and the AUS funds is the additional variable of currency. This is why I suggested to some people very early on that, despite the promise of greater volatility in the US market leading to more investment opportunities, there was actually a greater risk of volatile returns because of currency pressures.

    Just remember though, that currency can work both ways - it can accelerate your gains too. Yes, predictions are that the AUD will continue to strengthen ... but if you knew that for sure, you would be busy making a fortune in the currency markets and not playing with managed funds, right ? :D