Navra fund performance update
- Thread starter NigelW
- Start date
scott said:
Yeah that's true. BUT you must remember that you're investing in shares with NavraInvest compared with putting your cash in the bank backed by the Reserve Bank of Australia and the federal government's taxing power...so you should get a higher return. But the flipside is that there's potential for volatility ie in the short-medium term the underlying shares could drop in value...which doesn't happen with a cash deposit (instead the low returns, high tax rates and inflation eat it up instead
)Having said that though, the underlying shares are some of the blue-est of the blue chips and have undergone a rigorous filtering process.
Cheers
N.
Another few questions
Apart from the distribution that is paid (assuming not reinvested) is it possible that the actual capital invested in Navra appreciate (of depreciate) themselves, in other words is it possible to have a capital gain independent of the "interest" paid out.
and secondly, if you borrow (say from a LOC) to buy into Navra fund or shares through Comsec etc is it tax deductable?
Lastly is there a good or not so good time to buy into Navra in respect to distributions cycle?
Scott
Apart from the distribution that is paid (assuming not reinvested) is it possible that the actual capital invested in Navra appreciate (of depreciate) themselves, in other words is it possible to have a capital gain independent of the "interest" paid out.
and secondly, if you borrow (say from a LOC) to buy into Navra fund or shares through Comsec etc is it tax deductable?
Lastly is there a good or not so good time to buy into Navra in respect to distributions cycle?
Scott
Keeping things in context, I guess it's also true to say that although the Fund's Performance is quite good from a % Return Point of view, the 'general' Market would have provided a 'similar' return during this period.
Some may say it has performed in a similar manner to an Index Fund during the period and with the Performance Fee just kicking back into the black at about 0.15% I guess this would be close to the truth. Mind you, I guess if you're really trying to compare apples with apples the performance comparision should be somewhere between the ASX200 and the Accumulation Index as the Fund will receive some Dividends but admittedly by the nature of its Trading wouldn't ever get the full benefit of the Dividends.
The obvious distinction with this Fund though is that it has set itself a very high bar in that it doesn't currently charge a Management Fee, only a Performance Fee if it 'outperforms' the ASX200.
To date, while it has achieved the odd 'outperformance', so far it would appear this cumulative outperformance has not been overly significant ie. current Performance Fee for the Retail Fund is 0.15%.
There could be a variety of reasons for this such as:
a) In the first year the Fund would have suffered some challenges such as relatively small Funds Under Management and may have been constrained by relatively high transaction costs per size of trades.
b) In the last Financial Year the general Index has performed very strongly and has only really started to offer some significant volatility over recent months.
I think Year 3 coming up now will be very interesting for the Fund.
Firstly, although the Fund isn't managing billions of dollars, the current Funds Under Management are now almost $60 million and therefore aren't insignificant either. One would think the current FUM would reduce some of the restrictions it may have had earlier.
Secondly, we have seen some real volatilty in recent months. The Market dropped a reasonable percentage and has now regained this loss. This is the type of movements that should not only allow the Fund to perform well.......but should allow it to outperform. If it doesn't outperform in such an 'ideal' environment then I guess it would be reasonable to question the overall effectiveness of the trading style. Time will tell.
Thirdly, by Year 3 I would think(only my personal opinion) that the Company would want to start to see some Performance Fees coming in to contribute towards costs. Only charging a Performance Fee could be a two edged sword. If good Fees/Performance do indeed eventuate, then the Fee Structure will be seen as a brilliant marketing point and should accelerate FUM. If they don't or if they are further delayed, the costs of the Fund are still ongoing. Also, if a very strong and consistent market over a 12 month period can reduce the chance of 'outperformance'(due to lack of volatility) then the expected nil or low Performance Fees may need to be balanced by very good Performance Fees in other years to maintain an acceptable level of profitability?
Year 3 should be an exciting year for the Fund and I wish it and Steve all the very best.
It's great to see another Forum Member take on a significant challenge and succeed isn't it?
Some may say it has performed in a similar manner to an Index Fund during the period and with the Performance Fee just kicking back into the black at about 0.15% I guess this would be close to the truth. Mind you, I guess if you're really trying to compare apples with apples the performance comparision should be somewhere between the ASX200 and the Accumulation Index as the Fund will receive some Dividends but admittedly by the nature of its Trading wouldn't ever get the full benefit of the Dividends.
The obvious distinction with this Fund though is that it has set itself a very high bar in that it doesn't currently charge a Management Fee, only a Performance Fee if it 'outperforms' the ASX200.
To date, while it has achieved the odd 'outperformance', so far it would appear this cumulative outperformance has not been overly significant ie. current Performance Fee for the Retail Fund is 0.15%.
There could be a variety of reasons for this such as:
a) In the first year the Fund would have suffered some challenges such as relatively small Funds Under Management and may have been constrained by relatively high transaction costs per size of trades.
b) In the last Financial Year the general Index has performed very strongly and has only really started to offer some significant volatility over recent months.
I think Year 3 coming up now will be very interesting for the Fund.
Firstly, although the Fund isn't managing billions of dollars, the current Funds Under Management are now almost $60 million and therefore aren't insignificant either. One would think the current FUM would reduce some of the restrictions it may have had earlier.
Secondly, we have seen some real volatilty in recent months. The Market dropped a reasonable percentage and has now regained this loss. This is the type of movements that should not only allow the Fund to perform well.......but should allow it to outperform. If it doesn't outperform in such an 'ideal' environment then I guess it would be reasonable to question the overall effectiveness of the trading style. Time will tell.
Thirdly, by Year 3 I would think(only my personal opinion) that the Company would want to start to see some Performance Fees coming in to contribute towards costs. Only charging a Performance Fee could be a two edged sword. If good Fees/Performance do indeed eventuate, then the Fee Structure will be seen as a brilliant marketing point and should accelerate FUM. If they don't or if they are further delayed, the costs of the Fund are still ongoing. Also, if a very strong and consistent market over a 12 month period can reduce the chance of 'outperformance'(due to lack of volatility) then the expected nil or low Performance Fees may need to be balanced by very good Performance Fees in other years to maintain an acceptable level of profitability?
Year 3 should be an exciting year for the Fund and I wish it and Steve all the very best.
It's great to see another Forum Member take on a significant challenge and succeed isn't it?
hi alan.
i showed that graph because i thought it would be of interest. im not trying to say anything about NI or the fund, or belittle peoples investment decisions. you could do worse than an 11% return, and it's a hell of a lot better than doing nothing. people invest for a number of reasons be it growth or cash flow and as long as the fund is meeting their requirements it can be considered a sucess. its hard to go broke making a profit
cheers
i showed that graph because i thought it would be of interest. im not trying to say anything about NI or the fund, or belittle peoples investment decisions. you could do worse than an 11% return, and it's a hell of a lot better than doing nothing. people invest for a number of reasons be it growth or cash flow and as long as the fund is meeting their requirements it can be considered a sucess. its hard to go broke making a profit
cheers
pete_w said:hi alan.
i showed that graph because i thought it would be of interest. im not trying to say anything about NI or the fund, or belittle peoples investment decisions. you could do worse than an 11% return, and it's a hell of a lot better than doing nothing. people invest for a number of reasons be it growth or cash flow and as long as the fund is meeting their requirements it can be considered a sucess. its hard to go broke making a profit
cheers
Totally agree Pete!
You mentioned cashflow.......another advantage of this type of fund for some is that part of the overall performance return will get locked in and regularly distributed as cash. Some Funds may go up 20% in a year and down 20% the next without any overall return unless you get out. I guess there is less 'paperprofits' mentality here which may suit certain investors.......a bird in the hand and all that.....
Sim
Administrator
Alan H said:
... a very well thought out and balanced post - well done Alan H.
I agree with much of your analysis, and I also agree that the next 12 months are going to be very interesting - especially if the market starts to show a bit more volatility.
I think the key aspect about performance of the fund is that, in general, it should be consistently providing income in most market conditions. So from a "fund return volatility" point of view, I would expect over the long term for these funds that the returns (in this case, distributions) would be much less volatile than most other funds (especially index funds).
Index funds do great when the market is rising strongly, like now. Most funds that rely on stock selection and longer term capital growth do fantastically when the market is rising strongly, like now. The problem is that the market doesn't always rise strongly like it has in the last couple of years. Most of these funds find it difficult to add value in a market that isn't moving much, or indeed is going backwards. Index funds, by definition, perform really badly when the index performs badly - and there is no value add to compensate (of course there is always the debate that most value-add by fund managers doesn't actually add value in the long term - but let's not go there).
I would expect that the Navra funds will really start to shine in a market where the other funds don't perform well at all. When I say "shine" - I don't mean huge returns, I mean consistent returns - which is great when compared to the low or negative returns other funds would be experiencing.
The NavraInvest fund will most likely not see the soaring highs, nor the crashing lows that other funds will experience - instead it will simple plod along providing good regular income in most market conditions.
At least that's what I'm expecting based on my personal understanding of the way the fund operates.
As an aside - I'm still really curious to see what the fund can do in a real market crash though - although wishing a crash to happen is not a nice thing to do, from a technical point of view I'd love to see what really happens to the fund - and to see if it can capitalise on the opportunities presented in such an environment like I think it could.
Alan H said:Scott,
Given the current approx. 21% Fund Performance and the current 11.12% Cash Distribution you would be be expecting another reasonably healthy distribution this Quarter. The final Quarter Distribution won't be the full difference between 21% and 11.12% but I think you will find the final annual distribution is MUCH nicer than ING.
I've been wondering for a while, does the quoted YTD return (as on web site) include the pending distribution for the quarter? I crunched some numbers and it looked like the YTD return was total of distrbutions paid to date (ie 3 quarters as of today) and capital growth (ie value of shares owned by fund).
Someone please correct me, but does it work like this example:
Unit price 1/7/2004 : $1.00
Unit price 18/6/2005 : $1.10 (ie 10% growth)
Dist.paid 3% + 4% + 4%
Total return todate 21%
When June quarter paid effective end of June 2005, say 5%, then value of units goes down by 5% too - so the return for the year stays the same as current YTD figure.
Or have I got it alllll wrong
And for the record, yes I have units in NI and yes I support the concept well enough to gear in 100% for the cash return to go to my PPOR loan.
Sim, you say you would like to see how the fund performed in a real market crash. I would call a real market crash one where the market crashed and didn't recover for years, like Oct 1987. I can tell you how a fund that was heavily invested at the time would perform, it would be terrible. The only way to profit in that situation is by short selling, which most funds don't do. Perhaps the Navra fund would have been all cash. I don't know, as I don't understand how the fund works.....
[I have just edited the last 2 sentences, as I should not have said what I originally did say]
This correction we just had should be good for the Navra fund, because it was just that, a correction. Shares would have been bought for a discount, and the prices are now back where they were.
Anyone who looked at average market PE's would have been all cash in Oct 1987.
See ya's.
[I have just edited the last 2 sentences, as I should not have said what I originally did say]
This correction we just had should be good for the Navra fund, because it was just that, a correction. Shares would have been bought for a discount, and the prices are now back where they were.
Anyone who looked at average market PE's would have been all cash in Oct 1987.
See ya's.
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topcropper said:
Ahem,
1987 was my best year on the market to date.
Regards,
Steve
Steve,
With less than 2 weeks left of the quarter, do you have a rough estimate of what the distribution will be?
With less than 2 weeks left of the quarter, do you have a rough estimate of what the distribution will be?
Good to see you back Steve.
If 1987 was your best year, then you obviously knew how overvalued the market was, and was all cash when the dump happened. Average PE's were way into the 20's, and the market was full of spec stocks. Skase, Bond, etc.
Would the Navra fund go to cash if the market got to the same levels of overvaluation as Oct 1987?
Hey Steve, I would love to hear what your strategy was at the time. Like, when did you start taking profits, if you had any invested at the time of the crash, and how long untill you bought up after the dump. I was only an interested bystander at the time. Didn't know a stock from a fund.
[Steve, I edited my original post above, as I should not have said what I did, as it was wrong. Apologys].
See ya's.
If 1987 was your best year, then you obviously knew how overvalued the market was, and was all cash when the dump happened. Average PE's were way into the 20's, and the market was full of spec stocks. Skase, Bond, etc.
Would the Navra fund go to cash if the market got to the same levels of overvaluation as Oct 1987?
Hey Steve, I would love to hear what your strategy was at the time. Like, when did you start taking profits, if you had any invested at the time of the crash, and how long untill you bought up after the dump. I was only an interested bystander at the time. Didn't know a stock from a fund.
[Steve, I edited my original post above, as I should not have said what I did, as it was wrong. Apologys].
See ya's.
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Topcropper,
It appears you have a limited understanding of how the Navratrade share system used to run the Navra Funds actually works.
Steve doesn't actually make a decision when to buy or sell - it's made by the software he's developed over the last 20-odd years (and he uses personally).
So what you're looking at is a mechanical system based on analysing a number of fundamental measures combined with the current share price - no technical analysis as such.
To my understanding the system has been almost or totally in cash several times through the life of the current fund.
Go along to one of Steve's courses and you'll get a much better idea of how it works.
Or you could come along to the next CRIN seminar in Canberra in July (where Steve is speaking) to find out more.
Cheers,
Aceyducey
It appears you have a limited understanding of how the Navratrade share system used to run the Navra Funds actually works.
Steve doesn't actually make a decision when to buy or sell - it's made by the software he's developed over the last 20-odd years (and he uses personally).
So what you're looking at is a mechanical system based on analysing a number of fundamental measures combined with the current share price - no technical analysis as such.
To my understanding the system has been almost or totally in cash several times through the life of the current fund.
Go along to one of Steve's courses and you'll get a much better idea of how it works.
Or you could come along to the next CRIN seminar in Canberra in July (where Steve is speaking) to find out more.
Cheers,
Aceyducey
Steve has previously mentioned on the Forum that the Fund's average holding in shares is 75%-80% and 20%-25% in Cash. He'd also mentioned on the Forum that as of about November last year they were about 40% in Cash.Aceyducey said:
Given that the Market continued to rise strongly from November through to March 2005 you would assume(?) that the Fund's Cash Holding also continued to rise beyond 40% as they would have continued to primarily be a seller rather than I buyer. It would be fascinating to know what % Cash they were holding in March 2005 and for that matter now when the Market has reached new highs?
Hmmm.......that raises another interesting question??........HINT...HINT......can we coax you out of your recent absence Steve?
Ok.....back to the question.....in its most basic, unflattering, oversimplified to hell form, much of Steve's philosophies seemed to be about 'peaks and troughs' and what you do on the 'slippery bits' in between. Indeed the Company Logo while being a stylized 'N' is really more about a fluctuating line on a graph. 'Rental Reality', DCT etc all point to 'don't buy at peaks'. Indeed be a seller or at least lock in equity at these times.
Now.....we have another graph......this time it's not necessarily property prices or say historical share PER's but now it's Unit Prices in a Share Fund.
As the Unit Price rises significantly it's generally reflecting rapidly underlying share price increases. If you shouldn't buy the shares at this price, why would you buy the Units in the Fund at this time? Admittedly the Fund could be 100% in cash but then if you don't buy at this time, so could you.
Therefore, is there a reason why you wouldn't apply timed entry into such Funds in the same way as may be appropriate for property purchases or individual share purchases?
G'day Acey.
Yep, your right. I don't really understand how Steve's fund works.
[I have changed my original post. I should not have said what I first said, as it was wrong. Apologys.]
I would like to understand more though. I think my own method of valuing investments would have had me at all cash in Oct 1987. I had little invested in March 2000, which was similarily overvalued.
I would be interested if Steve could backtest his method to see what his fund would have done at the time.
Another thing to think of. It would be hard for a fund to be all cash at such a time of irrational market exuburance. Some fund holders would want to know why their money was siting doing nothing. Warren Buffet had the same problems in 1999, and 2000 when Berkshire Hathaway refused to touch tech stocks. He underperformed greatly until the bust happened. I guess unit holders just have to trust the fund manager, or take their money elsewhere.
See ya's.
Yep, your right. I don't really understand how Steve's fund works.
[I have changed my original post. I should not have said what I first said, as it was wrong. Apologys.]
I would like to understand more though. I think my own method of valuing investments would have had me at all cash in Oct 1987. I had little invested in March 2000, which was similarily overvalued.
I would be interested if Steve could backtest his method to see what his fund would have done at the time.
Another thing to think of. It would be hard for a fund to be all cash at such a time of irrational market exuburance. Some fund holders would want to know why their money was siting doing nothing. Warren Buffet had the same problems in 1999, and 2000 when Berkshire Hathaway refused to touch tech stocks. He underperformed greatly until the bust happened. I guess unit holders just have to trust the fund manager, or take their money elsewhere.
See ya's.
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