Navrafund & Sharemarket Crashes

Navra dist.

That is the bottom line in all this. I didn't go with the warrants either, although I have committed pretty well to Navra with company shares, agriculture, property and the wholesale fund. My LVR is sitting around 62 with LE after paying 6 months interest in advance, and I kept 15 percent in cash with Members Equity so that will allow a 90percent LVR. The distributions I am banking with M equity and then will see what happens in 6 months time. I am also refinancing some IPs (M equity don't charge a revaluation fee) but in this environment the valuation will come in less than I hope, but I will let it sit there and use it as a buffer. It is tempting to purchase more units in the WS fund but I haven't reached that personal development in my life as yet.

Bob

That's all I got

 

Hi All
can someone clarify this??

When I went to a Seminar on Navra funds etc. (7 months ago) I was told that Navra will continue to perform whether the market is going up or down regardless of volatility, infact best conditions to trade and make greater profits. Clearly this is not the case when Navra funds are now down 30%+ in value.

I did not jump in at the time as I was keen to see what would happen over the next 6 months.

Have I missed something here, how are the distributions holding out??

Cheers, AL

 

Hi AL - I wasn't at the seminar and I'm not sure if this comment was in relation to capital or income, but I'd think that no-one can make money if the market is not moving at all, so I'd say some activity (and I'm taking volatility to mean vigourous activity) is necessary for the market to even operate, and volatility is what the Navra fund says it relies on.

That said, from a capital point of view if shares are all just heading south, the unit price is not likely to go north, no matter what fund you're in (I'm not considering holding options for buys or puts here). As the old saying goes, it's time in the market, not timing the market, so I view fund, and in fact all, investment as a long term thing where the unit price (ie capital value) may drop, but will eventually turn around.

However, no-one's actually crystalising any capital loss unless they are forced to sell (eg margin loan) and can't buy back at the same price - there are numerous graphs and tables showing how long bears/crashes last and how long it takes to recover to the pre-crash price. The difficulty comes if you're too heavily geared and the margin lenders start wanting their LVR reduced - but, as a few people have noted in this thread, units as cheap as they are now might be the way to go for some people, depending on their position. Good luck picking the bottom of the market

In relation to income, distributions from the Navra fund continue to look good to me - 10%+ last year in a year when the market itself went back double digits. Other than buying a gold bar or some barrels of oil, it's a simple enough way to produce 10+%.

 

Hi All,
There is no way I could possibly pick the bottom, would be as easy as getting next week's lotto numbers.

For me it is like buying property at the moment, makes little sense. High interest, shocking yields, especially WA (ave 3%) and little chance of growth. I could buy bank shares with great yields but in current environment who knows if they will hold out and little possibility of growth.

I was listening to an analyst on Fox the other day (your money your call) and he mentioned that the bear market in OZ commenced around November and it usually takes around 12-18 months before it starts to turn around. Is there any truth in this? Anyone got evidence regarding this??

Cheers, AL

 

"I was listening to an analyst on Fox the other day (your money your call) and he mentioned that the bear market in OZ commenced around November and it usually takes around 12-18 months before it starts to turn around. Is there any truth in this? Anyone got evidence regarding this??"


Usually - all those ‘gurus’ have got no idea what they are talking about.
I’ve got only 8 years and 4 months data available, but as you can see XJO moved between two parallel lines for 3 years (range 600+ points).
Nobody can tell for how long market can travel sideways this time....

 

This is why I never liked these Narva funds, and never choose to invest in them.. They lacked performance during the good times, and now have been caught up in the mess like everyone else.. so the 'buy low sell high' obviously isn't attainable as steve promised..

since narva funds are down 30% this just shows they have actually performed worse than the all ords index, and your paying a fee for this! only people getting rich here are the brokers.

 

hi crc
I guess this in part is why I never actually jumped in, I could not get my head around it. Just made no sense to me.

So in reality investors purchase NF for INCOME at the cost of losing/sacrificing CAPITAL. Why would you do this??

To me this is same as purchasing property for $500K and in 12 months it drops to $400K, but that's OK cos the rents have gone up $20 pw. So in effect rob Peter to pay Paul. Where is the logic in this??
AL

 

There's no logic in your example, but it's also irrelevant. To compare to past years of NI performance the difference you quoted would be more like "purchasing property for $500K and in 12 months it's value stagnated $500K but we have made $100,000 rental return".

When we had the bulk of our funds in Navra we didn't have the servicability for another IP. We had (say) $250K equity. Should we leave it unused and earning us 6.5% (the cost of the interest we would be paying) or invest in Navra and earn 20% - nett 13.5%. It increased our income, and servicability, and enabled us to purchase another IP.

Obviously this year the same returns would not apply, same as the returns from most sharemarket-based investments have plummeted.

Different investment vehicles play various parts in people's investment journey. Don't assume just because you don't agree with it or don't understand it that it can't work for others. If you are only going to judge it based on 12 months history, it would be more useful if you can see into the future by 12-24 months too.

 

The "buy low, sell high" hasn't really applied to date. Up until January this year it was pretty much "buy high, sell higher". Now the Navra fund has taken opportunity to "buy low", it will take time for the recovery to eventuate before the big gains can be made. Very few funds (if any) have managed to deliver income and/or preserve capital in the last 6 months or so. Judging performance over such a short time frame, in the midst of the biggest market decline in recent years is meaningless.

Navra is heavy on financials, which are down well over 30%, hence dragging the unit price down. The fund has now taken a larger position in these stocks by reducing the cash holding from near 50% to below 10%. Personally, I'm very comfortable with this, as the longer term upside potential is greater, and in the mean time until that happens, high fully franked dividends will be received if sell targets aren't reached. Win/win for me.

 

agree, and the other problem is why would you crystalize profits? In a growth stratergie, you don't pay tax until you sell, and if you hold over 12 months, you get a 50% CGT discount. with Narva, you encurr brokerage, tax and in this case lost performace just to call it a income fund? If you want income, you can quiet easily sell down your growth fund to take income.. or even better, draw down equity from your margin loan.

 

boy, I would have rather hoped I had the bulk of my funds in my loan... getting 20% one year, and losing 30% the second simply doesn't add up to a smart decision. does it? this will drain servacibility and even send you bankrupt if your relying on that income, which doesnt come in the second year, but actually draws even more from your pocket.

yes, but narva promoted the fact that they would produce more consistant returns. hence why they only performed at 15% PA when most other funds were doing 20%+ PA Now that we have a correction, we have seen Narva fall even more than most other funds.. So where is the logic here? you get a lower return during the good times, and get slugged harder when things crash?

I don't think anyone is saying it wont work for others.. points are been made on what each person feels, and acts on.. no one is telling anyone else what to do.. but if you feel getting a fund, which underperforms the basic index is a good decision for you, then go for it, but I wont be paying someone a management fee to get underperformance.

 

Hi Tryhard

I am only interested in what NF can do for me today in the current climate I can not afford to cross my fingers and hope for the best.

I am sure many are happy with NF I am not here to prove anyone wrong on the contrary, I am merely stating that I would not sacrifice my hard earned capital for the current return.

Agreed, one shoe does not fit all, with $250K equity you could have accessed lo docs to service additional property, we have been using them for 6 years now and they have been a fantastic tool.

I will keenly monitor NF over the next 12 months and hope things do improve.


All the best, AL

 

Sim

Any chance you can get the after-tax performance figures for the Navra Fund and STW?

Or do these not necessarily matter because most people that are invested into Navra are negatively geared and don't mind the additional (taxable) income?

 

Hi Sim

I suppose it comes down to what you believe in and what you are comfortable with.

Yes, the market will eventually recover, for me I am weighing up the real cost of money servicing debt vs growth/income and how long I am prepared to take ongoing losses regardless of whether I sell units or not. If the units go south I am losing equity which in effect are $ I don't have to reinvest elsewhere.

In current climate many investments just don't stack up especially if you are capitalising interest. I will be patient and just wait for some clear signs that things are turning around, for one stabilisation of IR would help.

Cheers, AL

 

Hi Sim
I get where you are coming from, took a while..... Wont argue with you CASH is KING/QUEEN.