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Weightings, Diversification ?

Discussion in 'Managed Funds & Index Funds' started by MJK, 14th Nov, 2005.

  1. MJK

    MJK Well-Known Member

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    What percentage of total managed funds should be in Navra?

    Are people concerned about diversification within the managed funds area of their portfolio?

    Do investors in Navra have a personal formula they followeg 50% Navra and 50% other funds?

    or

    Are we so invested in direct property that our 100% investment into Navra is diversification enough? :eek: :rolleyes:

    Any thoughts? :D

    MJK
     
  2. gazza

    gazza Well-Known Member

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    MJK

    Each to their own I reckon , according to their risk profile and SANF.

    Personally I have 100% of my managed fund units in Navra and up until now , am not concerned by the 'lack of diversification'. As long as the fund continues to deliver strong income which more than pays for the holding costs of my property portfolio (3 IPS) and the company remains sound, I will continue to park my funds there.

    At the same time I am also investigating LPTs and LICs to see what sort of returns they deliver to potentially maximise my return.

    Cheers
    Gazza
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    This is going to be one of those questions which very much "depends" ... depends on your goals and circumstances.

    Navra is an income fund - as such if you own the units in your own name and are already in the top tax bracket, it's not terribly tax efficient. Structuring can help here though.

    There are other funds out there which provide good capital growth but with lower income ... these can be more tax efficient in some circumstances - and since Navra is very much a blue chip fund, I expect returns to be good but stable (lower volatility in income return is good here), while not necessarily achieving the potentially higher returns that some direct property and other types of share/fund investments might return (although with potentially higher volatility).

    It really depends on what you need to help achieve your goals.

    Personally, I don't have a problem with having a large exposure to the fund manager as such, more with the nature and characteristics of the investments themselves - I have calculated how much income I need from my investments over the next couple of years, and once I reach that goal from my Navra units, I'll look to funds with an alternative strategy in alternative markets - seeking returns higher than what I think Navra will do over the long term.

    My personal basic strategy is Navra for income to offset holding costs of my growth investments, plus direct property and other growth share investments (through managed funds) geared to pretty high levels for long term growth.

    So how much Navra do I need ? Enough to cover my holding costs. The trick is that I keep buying more investments, so those holding costs keep going up, meaning I seem to always need more Navra :rolleyes:
     
  4. Nigel Ward

    Nigel Ward Team InvestEd

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    That's a really good question MJK.

    One point to note is that the investing "universe" for the Navra Bluechip Australian share funds is the shares which comprise the S&P ASX200 index.

    Have a look at the invested - pedia glossary under "I" for index for a discussion of what that index means. Interestingly it comprises almost 80% of the shares listed on the ASX. So you could say that investing in the NI funds gives you exposure to the Best of the biggest and most liquid 80% of the Australian share market.

    The points Sim' and Gaz have made then come into play.

    Given that what I've noted above is the underlying investment, you need to ask yourself (and talk to your finanical adviser about) what other assets you would like and should have in your overall portfolio...

    Maybe it's:
    1) direct property?
    2) LPT's (altho I note that Westfield stapled is in the NI investing universe) so perhaps some unlisted or smaller listed property trusts may be worth a look-in?
    3) LICs? (but again I would target ones that hold shares outside the NI universe - perhaps one that invests in international shares? But watch the management expense ratio for the newer funds!!!)
    4) so-called alternative asset classes (perhaps through managed funds) such as private equity, hedge funds (but that's a broad category within itself), timber????
    5) where's your super?

    One of the great features of the NI funds compared with other managed funds, which is so far as I'm aware unique, is the pure performance fee. No outperformance no fee. You can't say fairer than that IMHO.

    All these things are issues you should talk to your licensed financial adviser about (and they should be well placed to answer!)

    good luck
    N.
     
  5. Glebe

    Glebe Well-Known Member

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    There are other forms of risk to consider

    - management risk (what happens if Steve gets hit by a bus)

    - technology risk - (what happens if incorrect code enters Navrainvest)

    - business risk - (what happens if Navrainvest offices burn down)

    etc etc

    I have 40% of my non-super worth in Navrainvest.
     
  6. Nigel Ward

    Nigel Ward Team InvestEd

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    Excellent points Glebe. They were major questions I had when investing both in NI and in the funds.

    On the key man risk, the system can be (and is) run without Steve on a daily basis as I understand it. Whilst I believe Steve (and one of his sons) fine tune the system, the NavTraDE system doesn't require him to run it.

    On the office fire issue, I understand the underlying code for the software has been "broken" into two sections and placed with two different escrow agents to guard against this eventuality.

    But no doubt Steve can answer all this better than me... (I still have visions of corporate espionage with ninja's abseiling down the building to steal Steve's laptop etc etc...but then maybe I've watched too many spy movies) :D
     
  7. Tropo

    Tropo Well-Known Member

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    "- management risk (what happens if Steve gets hit by a bus) "

    Consider another options :

    What happens if you get hit by a bus .... :confused:
    or...
    China declare war against USA...ect ... :confused:
    :cool:
     
  8. MJK

    MJK Well-Known Member

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    Hmmmm..... Thanks for all reply's.
    I reckon Navra is great. I'm happy with what its done for me so far. Its just the old eggs in one basket thing that I'm mulling over. Mitigating risk etc...

    MJK :D
     
  9. Nigel Ward

    Nigel Ward Team InvestEd

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    1) bugger!
    2) is this before or after 1? :p in either case I suppose "double bugger!"

    Life is risk - you will NOT get out of it alive. ;)

    You're correct that it's all a matter of perspective and managing risk but I think MJK's musings are valid questions to raise.

    Cheers
    N.
     
  10. Tropo

    Tropo Well-Known Member

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    1) bugger!
    2) is this before or after 1? in either case I suppose "double bugger!"

    Life is risk - you will NOT get out of it alive.

    You're correct that it's all a matter of perspective and managing risk but I think MJK's musings are valid questions to raise.

    Cheers
    N.


    It's nothing wrong with MJK or Glebe questions....
    Maybe we should talk about extreme cases from time to time ...
    :cool:
     
  11. Glebe

    Glebe Well-Known Member

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    Is a 45+ year old male dieing an extreme risk Tropo?

    Not that I'm putting the mockers on anyone! :eek:
     
    Last edited by a moderator: 14th Nov, 2005
  12. Tropo

    Tropo Well-Known Member

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    " Is a 45+ year old male dieing an extreme risk Tropo? ".

    Glebe,
    Age has nothing to do with it ( in my opinion ).
    :cool: