recommended investment trust

[voltage]

instead of trying to guess the next high performer why not use an investment trust who have full time experts to do this.
Can anyone recommend any of these funds?
I am a long term investor.
I was thinking to reconstruct my portfolio of aussie stocks with a small number of individual big stocks and use a fund for the rest of the market.
Any comments appreciated.

[OldRider]

It would be a good idea I think, to compare investment trusts with Listed investment companies. Each has it's own pluses and minuses.

There are a number of Lic's selling for rather less than NTA, so for the long term investor
the opportunity exists for enhanced capital gains as normality hopefully returns to markets.

Overall I think your plan has some merit, although I might do the opposite to your ideas, leave the large
companies to the Lic and manage the small ones yourself, more time consuming though.

[sharer]

Since undergraduate days I've experimented with various Funds, Unit Trusts etc, while at the same time running my own direct investments, & periodically compared the results.
Over 50 years later, i can only wish you all the best of luck Voltage.
Some of my investments went wrong, but the Funds always went wronger. When i sometimes got it right & increased the capital, not one of the managed funds ever made as much in the same period, in fact none ever made half as much, & quite often they actually went down when mine went up. Not that there was anything marvelous about my own management; while making a respectable return overall, there were several serious losses in my direct account. I tried several different funds, persisting with the idea basically because i was myself expert & busy in other fields & wanted to leave investment work to some other people expert in that field. Unfortunately it took me far too long to realise that, despite the hype & even having personal contacts with some funds, the funds in actual fact did not have reliable "experts" in charge of my hard-earned savings. They are just running a fee collection business for people to busy (or is it "lazy") to do the work themselves. Only recently i've had time to follow this more closely, and started to work on a more strictly rational basis. I'm convinced we have to take responsibility directly for our own investment portfolio, & making the evaluations and decisions behind each transaction.
Personally i've done very much better since finding this site & learning from the questions & discussions here, and trying especially to understand & follow the discipline & methods put forward by Phaedrus. I just wish i'd discovered his sensible advice years earlier.
All the best, Sharer

[shasta]

instead of trying to guess the next high performer why not use an investment trust who have full time experts to do this.
Can anyone recommend any of these funds?
I am a long term investor.
I was thinking to reconstruct my portfolio of aussie stocks with a small number of individual big stocks and use a fund for the rest of the market.
Any comments appreciated.

There are a few decent LIC's at the moment that look pretty cheap (most are below NTA), that also pay a divvie.

Ones' i like:

LST* - Primarily Gold
GMI* - Diversified Mining
AIX - Airports
KIL - Transport Infrastructure

For the NZX - Theres GPG*, KFL* & IFT* :rolleyes:

* Have personally held previously

Just make sure the Trusts you look at have a less than 50% debt gearing ratio, & interest covered at least 5 times.

A lot of the Energy/Utility Trusts are geared way over 100%, so any dividends paid will drop or go.

Avoid any with debt maturing within 12 months!

Listed Trusts do have high payout ratio's as they cannot retain the income, but this gets offset by lower growth, as they tend to debt fund any growth by acquistion.

I'd be sticking with the LIC's

[macduffy]

I'd second sharer's thoughts, almost word for word.

I bought my first shares in 1960 - 100 rights in a cash issue by NZ Breweries ( since absorbed into Lion Nathan) and 100 rights in an issue by United Empire Box ( finally "merged" with NZ Forest Products. became part of Carter Holt Harvey - I think - now probably owned by G Hart.)
My forays into managed funds/unit trusts have been unspectacular, to say the least, whereas I've had several multi-baggers, 3/4/5/6 and more times the capital outlaid. Sure I've had my share of losses but the beauty of equity investing is that you can lose 100% of an investment but you can make 100%/200%/300% or more on the upside. Remember always not to put all those eggs in one basket though.
Funds are ok IMO for a bit of international diversification but if you have the interest and the time to do the research, direct investing as far as NZ/Aust shares are concerned beats them hands down.
Like sharer, I take a bit more notice of the TA side of things these days and thanks to Phaedrus for his patient coaching in this regard.

:)

[voltage]

thanks for the comments, EFts are becoming popular, management fees as low as .1%
will think further

[lewinsky]

It could be worth casting your eye over a couple of the listed property trusts.
TSO for instance has a takeover on them. They were buying back their own shares prior to the takeover announcement. They were selling at about a sixth of their NTA.
The takeover looks attractive for the buyer if they can get it at the 30 cent level.
BJT is another selling at a substantial discount to NTA and is on a div yield of 27%.
Trading at 34 cents against an NTA of $1.75.
Sure there is risk involved and you may be able to pick them up cheaper, but the world has got to fall along way for you to be out of the money.
I am sure there are others out there. Do your own research and tread carefully in this market.

LEW.

[lewinsky]

Australian Listed Property Funds are worth keeping a watch on.

TSO, VPG,BJT and GJT are all trading at big discounts to NTA and in the case of BJT at a generous dividend yield.

I had a good play on TSO but the takeover offer at 30 cents looks speculative against current trading price.

VPG has moved from 10 to 14 this week.

GJT has the lower entry price but the associated risk.

These should all rerate over time.

DISC: Hold GJT. Highest risk but biggest potential for rerate. Fingers crossed.

[COLIN]

Australian Listed Property Funds are worth keeping a watch on.

TSO, VPG,BJT and GJT are all trading at big discounts to NTA and in the case of BJT at a generous dividend yield.

I had a good play on TSO but the takeover offer at 30 cents looks speculative against current trading price.

VPG has moved from 10 to 14 this week.

GJT has the lower entry price but the associated risk.

These should all rerate over time.

DISC: Hold GJT. Highest risk but biggest potential for rerate. Fingers crossed.
L: See my post under "Suppliers of Shovels" re CNP.
Interested that you hold GJT - I did hold some for a while but took fright and sold when they went into a breach of their covenant with a Japanese lender; haven't followed them since - has that breach been dealt with? Agree that if GJT comes through there is potential for huge return on outlay at present prices.

FKP is also a candidate.

[beacon]

expecting huge NTA downgrade on AJA. GJT is touch and go at the moment. FKP has bugger all income vs increased shares. But upside potential on all three. CNP is screwed by banks. Don't think that's worth bothering with at current price. NZ LPTs are overpriced, given NZ economy. The bus has mostly left ...

[beacon]

L: See my post under "Suppliers of Shovels" re CNP.
.

Colin, can you post a link for above...

[Lizard]

There is possibly an opportunity for a high-risk punt on AJA (Astro Japan property Trust, formerly BJT, i.e. ex-Babcock).

AJA is due to announce their second half div at any time. Their last forecast was for 7.0cps for the year and they paid 3.5cps of that in first half. So due to announce div of 3.5cps on a share price floating around 35cps - i.e. pre-tax divy at 20%.

AJA is a risky investment as it is heavily leveraged and the Japan property market has continued to fall - although some market sources think it may have bottomed. At last count leverage in AJA was about 72%, but it may well be 80% if second half revaluations bite. However, the NTA was last 76cps so there is plenty of fall built in. Cashflows are sturdy due to Japan property cap rates being up to 3 times higher than the loan interest rates.

While it is possible that AJA could eventually get into financial difficulty if the property market continues to fall, it doesn't look likely in the immediate future. This is because only one of their 5 loans contains a leverage covenant - and the leverage ratio can't currently be re-tested for that loan until Feb 2011 and only relates to the specific assets (so may be covered by moving around spare cash). The other 4 loans only have covenants relating to income vs interest and remain comfortably within these. The most risky of these is the loan required to be re-financed by Dec 2010, after that all other loans have terms to 2012 onward.

So for a high risk punt, the dividend announcement could send this considerably higher. If the Japanese market has bottomed, there is huge leverage here and currently a large discount gap to NTA (although I'd expect NTA to fall to about 58-66cps after the next round of valuations).

The downside risk is that the property market continues to fall and the discount to NTA is eroded as well as dwindling rentals reducing cashflow - driven by lower occupancy rates. Also possibly some pressure from higher interest rates on the loan to be re-negotiated. However there is also possible upside from strengthening Japanese currency.

I don't currently hold AJA, but thought I might give it a mention in case anyone else is interested.

[lewinsky]

Hi Liz,

I always enjoy reading your analysis. I am holding AJA because of the yield and discount to NTA.
From memory the percentages of properties untenanted is quite low, and there are some good longer term tenancies locked in.
I notice that the SP has increased by 1.5cents since your post. Any coincidence?
I would be interested in your thoughts on EAL and RGD as well. Both seem to have some upside, but then you have to factor in Greece, they can't even win at soccer.

Cheers

LEW.

[Lizard]

Hi Lewinsky,

Not sure if AJA is a long term "buy and hold" at this point - the Japanese falling knife has been particularly long and pointed for the many that have tried to catch it.

I will try and look at RGD and EAL, but have a few reservations about anything dependent on mining capex, at least in the short term.

Good luck with the AJA trades - I'm just watching this one - have more than enough high risk punts in play for my appetite. Need some stocks that go easier on the adrenalin.

Liz

[Lizard]

So for a high risk punt, the dividend announcement could send this considerably higher.

Got the 3.5cps div announcement this afternoon. Currently kicked on another cent to 37.5cps. However, best be cautious as looks like cashflow ex-expenses is down about 32% on last half. Still enough to cover the div, but may still be some pressure on that (near 20%) distribution if occupancy and rentals don't recover a little. Likely rent deposits were a drain on cashflow (would have refunded more than brought in).

Good luck for this one Lew - I'd still like to be trading this, but not enough in the kitty.

[Lizard]

If anyone actually is on this trade, the ex-div date is 24 June. The next announcement will most likely be re-valuations (mid-July) - probably more downside risk than upside. So might want to consider selling cum-div if just in it for the short term.

Otherwise, follow the chart I guess - especially if you're not a freebie chartist (like me) and can adjust the charting for 10% div.

[lewinsky]

If you are looking at yields, HHY is worth casting an eye over.

Recently confirmed their 30 June Distribution.

[Fred114]

I picked up AJA in MAy 2013 and have been enjoying a bit of growth. Risky and defensive to stagnant Japanese economy,as Abenomics fiscal stimulus kicks in. Took a hammering in GFC.

Motely fool from Nov 13 paints it like this:

Astro Japan Property Group (ASX: AJA) owns commercial and residential buildings mainly located in the heavily populated Osaka and Tokyo areas. Retail properties comprise 56% of the portfolio, with offices 34% and residential 10%.

There are strong signs Japanese commercial property is in for a period of sustained positive performance. Tokyo-listed real estate investment trusts have experienced active trading over the past six months and large property transactions are on the increase.
Japan is finally breaking free from two decades of economic stagnation and a 60% increase in the Topix index over the past year underscores growing confidence. There is a positive outlook for asset and income returns from commercial property.
Astro’s property portfolio currently has an occupancy rate of 96.8%. By Australian standards, the gearing ratio of 60% looks high; however, the cost of debt averages 2.7%.
Trading at $3.61, Astro Japan is selling at a 36% discount to net asset backing of $5.59 and has a distribution yield of 5.6%.

SP: $4.89/share Nov 14 at a 20% discount to NAV of $5.59/share

http://www.fatprophets.co.nz/Member%20Area/Product%20Landing/Report%20List/Report%20Page/Article%20Page.aspx?id=9e065042-db94-45cf-98f7-08b9dd15b43f&product=Australasian%20Equities&pt=paid
http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=AJA:ASX

DISC: Hold