Australia, Personal Finance - Written by on Wednesday, June 1, 2011 8:56 - 0 Comments

Smart Investor: Earning It, June 2011

Smart Investor, Earning It, June 2011

ROADTEST

Peters MacGregor Global Fund

Who runs the fund?

Peters MacGregor is run by Wayne Peters, an Australia-based global equities fund manager. He is a specialist in private client portfolios who created a fund along the lines of his investment style.

The basics: A concentrated portfolio of global stocks. Aims to produce good returns over five years or longer, and expects to incur short term volatility along the way.

The process: Peters is famously picky. Stocks have to fit his value methodology and also be historically cheap, at least 25% below their real value on a discounted cash flow basis, before he will buy. Beyond that, they can be in any country or industry, without reference to any benchmarks – and there are never more than 20 stocks in the portfolio.

The bottom line: The fund can spend a lot of time in cash, but lately has been doing very well: at 15.15% for the year to February 28, it is the best in its field according to Morningstar. It is also one of the few to be in positive territory over three or five years.

Fees: If you invest through Officium Capital, which is a responsible entity created to give ordinary investors access to the fund with a minimum $10,000 investment, then the management costs are 1.79% per year. There’s a big potential performance fee too: 20.5% on net increases in net assets over each quarter, subject to a high watermark.

Verdict: It pays to be picky.

NEW FUND

Equiti Capital US Multifamily Property Fund

What is it?

A fund investing in US multifamily assets.

What are they?

Apartment blocks and the like – but complexes of apartments owned by one entity, and run much like a corporation with its own management team. This fund partners with Riverstone Residential Group, one of the largest apartment-focused property management groups in America.

Is that a good place to be?

The fund’s backers cite a research report saying the US apartment sector is amid a sweeping recovery and expansion cycle supported by strengthening employment growth and vacancy declines, as well as a demographic shift underpinning the multifamily theme: baby boomers and Generation Y people who are unable or unwilling to live in their own home. But they also say Australians have searched for US property opportunities on the back of the strong Australian dollar but become unstuck through lack of local knowledge.

Who runs the fund in Australia?

Equiti Capital is a specialist property investment manager and acts as the responsible entity for the fund in Australia. Its key people are Linden Toll, who used to be president of the Australian Direct Property Investment Association, and Andrew Meakin, whose CV includes roles at the Commonwealth Bank of Australia.

What are the costs?

There’s a management fee of 1.23%, plus a performance fee of 20.5% of the fund’s performance over a hurdle of 10% per year. Then there’s an acquisition fee of up to 3.08% of the cost of any new property the fund acquires, and a disposal fee of up to 1.03% when it sells again. It’s open to anyone with an initial investment of $10,000 or more.

GIZMO

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Buy it from www.mophie.com for US$79.95 plus shipping costs.

FUND WATCH

Resolution Capital Global Property Securities

A fairly new fund, this global property securities product has yet to earn its stripes. While its 29.18% return last year sounds terrific, that’s actually quite a long way under the benchmark – a reflection of the revival of this asset class over the last 12 months after a torrid financial crisis.

Its top holding, Simon Property, is the biggest real estate company in the USA, with interest in 392 properties. Australia’s own Westfield ranks second, but there’s a definite North American tilt to the portfolio: SL Green Realty, the next largest holding, is New York’s largest office landlord, and Home Properties is another US REIT. Elsewhere, Unibail-Rodamco holds shopping centres in European capital cities, Land Securities is the biggest office property group in the UK, and Mitsubishi Estate is one of Japan’s biggest players.

If the fund continues to hit big returns, nobody is going to be complaining about the benchmark, but it will be interesting to see how it stacks up in tough markets.




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