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Watermark Global Leaders Fund

Discussion in 'Listed Investment Companies (LIC) and Trusts (LIT)' started by Gormie, 30th Oct, 2016.

  1. Gormie

    Gormie Member

    18th Jun, 2011
    A new IPO is about to launch, the Watermark Global Leaders Fund. It is a long/short market neutral fund which could be a good play in these days of market uncertainty, particularly for those with little international exposure - like me. ETF watch have a good article about it and I am wondering what others think.

    Watermark Global Leaders IPO: Market Neutral Global Investing
    twisted strategies likes this.
  2. twisted strategies

    twisted strategies Well-Known Member

    3rd Nov, 2013
    i realise this has yet to be floated

    but seems to be a bit light on portfolio construction ( long/short 100% global shares , currency hedged and may use leveraging looks like trying to make that $1.00 price stretch a bit far )

    being global ( implying international ) suggest no ( or negligible ) franking .

    i still haven't spotted distribution frequency ( how often they pay divs. ) but see they extract fees montly

    i will wait and see here
    looks to be too busy ( management activity ) and too vague ( not even saying emerging markets or blue chips to give a guide of principal direction )
  3. Hodor

    Hodor Well-Known Member

    17th Sep, 2016
    With market neutral funds the hurdle for their performance fee is always low, RBA cash rate in this case then they whack you with 20%.

    The LIC structure should offer franked divs been an Australian company. Like PMC and MFF.
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  4. austing

    austing Well-Known Member

    5th Jun, 2006
    No thanks.

    1.32% mgr fee and 22% performance fee with a pathetically low performance hurdle as pointed out by @Hodor. That is, the RBA cash rate which is currently 1.5% is all they need to exceed to get the 22% performance fee :eek:.

    Trouble is with some of these "trading" LICs is that the Dividends can look attractive but it's at the expense of NTA growth. Take their older popular ALF which many have invested in based on what appears to be great performance and fat dividends. But the expenses including fees are huge ($42 Mil in 2016) for a relatively small LIC ($407 Mil) which has a big hit on the bottom line. Check out the following link which shows the poster's analysis of results for ALF over 5 years. If you look at the bottom of the spreadsheet data you will see that although dividend payouts have been high NTA growth appears to have gone backwards over the full period:

    Listed Investment Companies - Fundamental Analysis

    Add to this the tendency for newly listed LICs to trade at a noticeable discount until options expire (usually 18 to 24 months after listing) due to the potentially dilutive impact it can more times than not be wiser to buy on market rather than participate in the IPO. After all the investor is only initially getting around $1.078 for each $1.10 invested in the IPO in the hope the bonus options "may" come good. Unfortunately more times that not these bonus options are of more benefit to the mgr rather than the investor.

    I personally avoid Watermark's LICs. The only time I might potentially be tempted to invest in these or other LICs with very high fees is if they at some stage traded at a substantial discount to NTA. That is, the discount needs to be sufficient to compensate me for the impact of the high fees. At some stage between listing and option expirary this might well be the case!

    Personal view only, Not advice.
    Last edited: 31st Oct, 2016
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