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Discussion in 'Managed Funds & Index Funds' started by Simon, 13th Oct, 2005.

  1. Simon

    Simon Well-Known Member

    Joined:
    17th Sep, 2005
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    520
    Location:
    Newcastle
    Mt distribution statement just arrived and with it was a voting form for a coming meeting.

    I don't have it nearby so cannot refer to it just now.

    Can someone give me a bit of background and perhaps a "soldiers five" on what it is about?

    Thanks,
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    My understanding:

    Currently NavraInvest calculate the outperformance of the index that determines their performance fee on a daily basis, and collect that money every quarter (I think ? Steve did answer this question somewhere - must track it down ... I might be wrong there).

    However, the actual amount of income they get to keep is determined by the outperformance at the end of the financial year (if that is lower than the amount they have collected throughout the year, they have to give the money back to the fund).

    Most other fund managers collect their performance fee monthly - and of course they keep it regardless of how well they performed.

    In order to provide more liquidity to the business, they now wish to change this so that the calculations for performance fees are done at the end of each quarter. This means that the business is paid based solely on their performance against the ASX200 for the previous quarter.

    The ramification of this change is that there is a possibility that the overall performance fees that unitholders pay could be higher. For example, if they have a really good quarter and collect a 3% performance fee, they get to keep that money, regardless of how well they perform for the rest of the year. If they underperform for the following quarter, they don't get paid for that quarter. If they outperform for the quarter after that, they get paid for that quarter. But if for the year overall they have underperformed the ASX200, they still get to keep the performance fees they collected throughout the year.

    Personally I think it is a much more sensible way to do it - much cleaner, and you know exactly what the situation is quarter by quarter when you get your distributions. When I first worked out how they were getting paid, I actually questioned the viability of this long term - it is very difficult to run a business while having to wait for 12 months to determine how much money you are going to make! Essentially, the income for the business is almost determined by a "final roll of the dice" at the end of June!!

    So even though as a shareholder I am naturally biased, I actually think this is a much better way of doing things.

    My philosphy is that I have no problems in someone making money for making me money - provided that the process is transparent and I know they are not ripping me off. You can't get much more transparent than NavraInvest ... how many other companies do you know that publish the exact details of how they get paid to the point where you can work out the income of the company ?

    Just my opinion.
     
  3. johnnyb

    johnnyb Well-Known Member

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    16th Aug, 2005
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    Location:
    Hobart
    I agree with Sim that the new propsal makes more sense for the company (better able to manage CF).

    Note also the second resolution, which says that if the proposed changes are passed thay should apply from and including the 30 Sep 05 quarter (the one we've just had distirbutions from) onwards.

    I have a question about the proxy voting form. At the bottom they have two sections for signing the form. One for individuals and one for companies. Our units are held by a trust with myself and my wife as trustees. I assume we sign the "Individual" section, but does anyone else have a different view?

    John.
     
  4. Simon

    Simon Well-Known Member

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    Thanks Sim.