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Why two Navra Australian funds ?

Discussion in 'Managed Funds & Index Funds' started by Here_To_Learn, 20th Jun, 2007.

  1. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Thanks Michael for sharing the update.

    Although I invest in the WS Fund there are a lot of similarities. In fact does anyone know the reason behind 2 Australian Navra funds instead of 1 ? My understanding is that the trading is similar if not identical.

    I have never asked Steve ... perhaps someone here has ?
     
  2. gazza

    gazza Well-Known Member

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    I have investments in both the wholesale and retail fund. I believe the wholesale fund is for platforms to invest in and their is a minimum amount eg super funds etc and have a slightly different fee structure but I believe the investing strategy is the same. Interestingly enough I was told yesterday by NI that individual investors can no longer invest in the wholesale fund (they can however keep their existing investments in the fund), so any further investments I make will have to be in the retail fund.

    Gazza
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    That's disappointing if it is true (I see no evidence of such a change on the website or in the PDS currently available from the website).

    ... I refuse to pay upfront fees and I refuse to use a third party just to avoid those fees. The whole upfront fees thing is completely idiotic and only panders to the financial planning industry with no benefit to investors. This is why I only invest in wholesale funds.

    If NavraInvest were to refuse my money into the wholesale fund (assuming I didn't already have money invested there), I would simply put my money elsewhere rather than invest via the retail fund ... unless they were prepared to waive the upfront fees and also drop the ongoing fees on the retail product ... which kind of defeats the purpose.
     
  4. DaveA

    DaveA Well-Known Member

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    i wonder how the dividend re investment effects the new policy...

    as long as you put the minimum in i dont see an issue with it...
     
  5. coopranos

    coopranos Well-Known Member

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    After becoming a little fed up with underperforming platinum funds and property securities funds I have recently added the retail fund to my portfolio. Part of the reason I didnt invest previously is because I dont want to put the minimum amount for the WS fund, and I could find Navra on any of the online brokers with rebated entry fees (like Sim I refuse to pay 4% to enter a fund when I am making my own decisions and am already copping a buy/sell spread). However I recently noticed they showed up on InvestSmart. Perhaps they were on there previously but I never saw them...
     
  6. DaveA

    DaveA Well-Known Member

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    i will sort of answer my own question...

    the asx 50 has underperformed the asx200 this quarter, currently its 0.44% under the ASX 200 but has been by as much as 0.93%

    makes it even more of an amazing story....
     
  7. TryHard

    TryHard Well-Known Member

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    Coop you know you can just fill in the application form online and invest direct to avoid any (4%) fees right ?
     
  8. coopranos

    coopranos Well-Known Member

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    I am sure I read in a PDS from them a few months back that if you didnt use a broker NavraInvest would retain the 4% entry fee.
    It is entirely possible I made it up or am just stupid though
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    That was my understanding too coopranos ... and I think it's an idiotic policy that most managed funds follow.
     
  10. gazza

    gazza Well-Known Member

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    I too was very surprised when I was told that I could not make further investments into the wholesale fund. Two Navra people told me that but I sent an email to Steve asking him but haven't heard back yet. I will phone him today and let eveyone know his answer.
     
  11. Here_To_Learn

    Here_To_Learn Well-Known Member

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    OK I will ask my silly question again ...

    Does anyone know the reason behind 2 Australian Navra funds instead of 1 ?
     
  12. Simon

    Simon Well-Known Member

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    I think it was designed to protect the businesses of Financial Planners. With today's discount brokers it isn't an issue. No reason to go direct especially with some brokers that even rebate the trail as well.
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I think it was already answered ... but I'll give a bit more detail.

    The two funds are practically identical - they trade the same trades, although the amounts of each trade would be different given the differences in inflows and outflows of money from investors.

    The Wholesale fund is meant to be for institutions and other investors who have a large amount to invest and won't be using a financial planner for advice or using facilities such as monthly savings plans.

    The idea is that retail investors cost more to the company than wholesale investors - it costs proportionately more to deal with someone who invests $25,000 than someone who invests $250,000 ... so they charge more fees to the personal investing those smaller amounts. Savings plans are quite expensive to administer too (regular small transactions).

    There are two aspects to the difference in fees - the upfront fee paid to advisors, which is not paid for Wholesale investments, and the lower ongoing management fee for the Wholesale fund, which reflects the lower relative cost of operating that fund.

    Minimum withdrawal: $500 vs $10,000
    Minimum balance: $500 vs $100,000

    From a cynical point of view, the fee structure of most Retail funds is mainly there to support the costs of paying financial advisors their upfront and trailing fees.

    Compare the new management fee structure coming into effect on July 1: 1.1% for Wholesale and 1.5% for Retail ... and then consider that there is a 0.44% trailing commission paid to advisors for the Retail investments ... which is not a coincidence!
     
  14. Here_To_Learn

    Here_To_Learn Well-Known Member

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    Sim - as usual ... thanks for your detailed reply.

    Makes sense.
     
  15. redrover

    redrover Well-Known Member

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    Are Navra trying to encourage new investments into their fund by changing the fee structure? FUM have increased but only 'cause the market has been heading up, but how much "new" investment has been generated over the last quarter?
     
  16. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Difficult to tell - and I'm not sure they would provide that information to the general public.

    I'd suggest that the change in fee structure is not aimed at increasing FUM - indeed, the fees will be effectively increasing from what they are now, because previously, investors have paid very little in fees (some years almost nothing at all) due to the fund not outperforming the index. The change in fees is more about generating enough income to keep the company operational

    ... although I also suspect that investors will possibly benefit from the change to a fixed fee structure if the current market volatility continues or increases ... the fund might have hugely outperformed the market one quarter, gaining a lot in management fees.
     
  17. gazza

    gazza Well-Known Member

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    Spoke to Steve this morning. He confirmed that you now need a minumum of 2.5mill to invest in the wholesale fund. Apparently this change was made at the same time as the decision to introduce a fixed fee was made. He indicated that the main difference was the trailing commision that was payable in the Retail fund but pointed out that this was paid by NI and not by individual investors. He also said the Retail fund has actually performed slightly better than the wholesale fund over most quarters due to the fact the people are continually moving money in and out of the fund to fund property purchases, etc and that this results in some add backs to the fund (I assume due to the buy/sell split).
     
  18. SugarFreeGum

    SugarFreeGum Member

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    I've been investing in the Navra RETAIL fund for 2 years now and have never been charged a 4% entry fee. I setup my margin loan with BT, filled the paperwork and they handled the rest.
     
  19. OLI

    OLI Well-Known Member

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    My experience is similar to SugarFreeGum. I simply crossed out the Advisor details section on the last page of the application form and wrote N/A and I have never been charged an entry fee into the Retail Fund. I recently setup a margin loan with BT and didn't pay an entry fee then either.

    Regards, OLI.
     
  20. Leandro

    Leandro Well-Known Member

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    I am guessing the 2.5mill minimum would make the wholesale fund out of reach for most individual investors.

    And while the trailing commision is paid by the retail fund, they are doing that from the higher fixed fee which is being charged to the investor as sim has pointed out.

    Would that make the MER of the retail fund be 1.5% if you are not paying entry fees?