Barramundi ( BRM )

[winner69]

If BRM believed in themselves and thought they were guru investors who could make above average returns one would think they would want as much money as possible to play with .....more money making even more money

But they keep giving some cash back (the rest of divies are paper money by issuing shares) so the investable amount is reduced.

I'd prefer to see a manager making heaps out of a ever growing fund (after all it is a closed fund so no redemptions)

[winner69]

not everyone is so arrogant to believe themselves to be guru's. Fisher fundS are just trying to offer an alternative.
H

Not quite with you snapiti


Quote - The aim of Barramundi is to offer investors competitive returns through capital growth and dividends, and access to a diversified portfolio of investments through a single tax-efficient investment vehicle

I would have thought that competitive returns (whatever that means in reality) is what punters are after. I am also pretty sure that barramundi managers would be disappointed in themselves (maybe not money wise but at least ego/pride wise) if they didn't achieve this.

Even you snapiti try to invest in the best of breed. You have done well with your timing with barramundi but I am sure that you would have deserted them I they weren't meeting your expectations.

[nextbigthing]

Quote - The aim of Barramundi is to offer investors competitive returns through capital growth and dividends, and access to a diversified portfolio of investments through a single tax-efficient investment vehicle

Interestingly the way the have set it up (paying dividends from capital and taxing capital when paid as a dividend) is almost exactly the opposite to their mission statement above.

[nextbigthing]

It would appear to me an investor would have been better off leaving their money earning interest in the bank.
Their $1 of capital would still be worth $1 not 62 cents [BRM share price] and they would have had steady dividends.
It confirms to me most managed funds are best avoided at issue.

Advocates would argue that they've been paid 32c in dividends in that time so all is well Percy. Apparently they read but they don't comprehend...

[winner69]

One last post

FY12 BRM income $1710k and management fees/performances fees paid $1052k. Some 60% income paid out management fees

FY13 income $20982k / fees $2115k .....only 10% income in fees

Nalances heads we win tails you lose

[Lizard]

It would appear to me an investor would have been better off leaving their money earning interest in the bank.
Their $1 of capital would still be worth $1 not 62 cents [BRM share price] and they would have had steady dividends.
It confirms to me most managed funds are best avoided at issue.

Bit harsh Percy, since (as many have pointed out), the $1 start point going into the GFC is a harsh start point for any equity investment... here's a share price comparison with the Smartfund, mid cap aussie index, MZY:

Attachment 5664

This doesn't appear to be adjusted for dividends (unfavourable to BRM with the much higher yield), but still shows BRM as performing similarly to an NZ-based index fund for similar equity type.

For further comparison, here are a few "blue chip" NZ stocks over the same period (or at least were at the time):
Attachment 5665

Probably a better return overall investing in a basket of blue chips, but the individual picks can be a lot more volatile than a fund... bit of a problem if you're having to keep selling a few for income. Besides, not everyone wants a part time job in investing as part of their retirement plan.

It is fine that most ShareTraders wouldn't touch BRM - the target market for BRM is NOT people that are active enough in the markets to read and post on share trading forums. Nor is it probably Financial Advisers that are set up to provide a client with regular drawdowns from capital and collect their own fees accordingly.

[nextbigthing]

I'm normally not a fan of companies that pay divs out of capital. However, as I argued some time ago on the MLN thread, in this case I find it quite useful (I hold MLN, not BRM).

I don't consider BRM or MLN as a share in itself, but as a managed fund. In my view, managed funds are a shortcut for the bits of your portfolio you don't want to spend a lot of time on and are willing to pay someone else to spend the time. For those that invest in managed funds via some kind of platform or adviser, using MLN may be no more efficient than any of the other funds available. However, for those who don't want to pay for an adviser or platform on top of their management fee, MLN (and BRM/KFL) is easy to buy and sell on-line and offers the tax advantages of a PIE structure. Furthermore, for the large proportion of investors that draw down against their portfolio, a regular, reliable high dividend yield is ideal. Yes, it may come out of capital to some extent when annual returns are below the 8% returned but this SHOULD over time become income-smoothing rather than depleting - having listed at the peak doesn't help.

Try keeping a semi-consistent income while having your share portfolio tied up in the usual selection of low/no dividend funds and you would have to make quarterly sales of small parcels to get the same cashflow - a move which is probably both time consuming, impractical and possibly expensive.

Overall, I think there is a niche for this model. I'll be disappointed if Fisher Funds are ever influenced by the critics to drop the dividend policy in exchange for a lower or more fluctuating model. If you don't need the dividend for income, take the DRP and get the re-investment growth in your holding that way.

The one set of complaints I can relate to is whether their share-picking ability is any better than average. Though in the short term, enough discount to NAV can cover a few mistakes...

Good post Lizard. Great to see some reasoned comments more in BRM's defense.

You make a valid point regarding it being a kind of niche and that the consistency of the dividends is important to some people. The model would obviously work long term if they achieved even just average returns. So far they have failed to do this, but hopefully they can turn it around in the future, get the the price back up to or above a dollar and continue to pay consistent dividends.

Cheers,

NBT

[nextbigthing]

It is fine that most ShareTraders wouldn't touch BRM - the target market for BRM is NOT people that are active enough in the markets to read and post on share trading forums. Nor is it probably Financial Advisers that are set up to provide a client with regular drawdowns from capital and collect their own fees accordingly.

That's the bit I find concerning though Lizard, they're targeting people who probably struggle to understand/have no interest in understanding the numbers (like you say, people that aren't on this site for example). These people think they're getting a great result when they see the 10% dividend each year. Then when they go to sell out, they get only a portion of their capital back which happens to be about the original amount minus the dividends they have received! And as Winner points out, with as much as 60% of income in management fees, that's terrible!!!

Hopefully they can turn it around!

[percy]

Advocates would argue that they've been paid 32c in dividends in that time so all is well Percy. Apparently they read but they don't comprehend...

How does the 32cents compare with what the investor would have received in interest on bank deposit. 7 years at say 4% a year,so 28 cents.Listed October 2007.
Today the investor would still be receiving interest on their $1 of capital, while the BRM at issue investor would be receiving a return on 62cents of capital!
So 4cents better of on dividends.Add that to 62cents SP =66cents.Capital lost$1.00 -66cents =34cents which means a loss of 34% of capital on issue price.
The answer I would like to know is how does BRM compare with an index fund with low fees?

[Lizard]

The answer I would like to know is how does BRM compare with an index fund with low fees?

Have a closer look at my chart in post #455 against the MOZY... this is the only similar alternative available to NZ investors and provides a much lower income stream. BRM has fallen slightly lower since launch, but that is more than covered by the higher yield. Also, I suspect the increased discount to NAV, as MZY doesn't carry much of a discount and BRM has seen theirs contribute to the s.p. decline since launch by at least 6%.