Managed funds

[BlackPeter]

My short term crystal ball.
I'm picking a very choppy directionless first quarter of 2024 as most overseas markets digest and hopefully embed, the massive gains from the last quarter of 2023.  Q2 CY24 could be a good time to apply new capital as the market sets itself up for a stronger second half with many central banks likely cutting by then.

Clearly one of many possible scenarios for 2024. Just wondering - is this prediction based on the assumption WW III starting in the first half of this year in earnest, or do you assume it will take a bit longer?

I guess what I am trying to say is - given the current geopolitical situation I'd be very careful with any predictions of future trends. So many things could happen - and any of a large number of  idiots can easily change the course of (not just) the world economy.

That's the options I curently see:

Arabs (Sunnies), Iraninas (Shiites), Jews and Christians (well, sort of - US and UK) coming to their senses, gather together around a big peace fire, lighting a pipe (as long as smoking is still allowed) and work together to further the world economy.

China and Taiwan agreeing to disagree and discover their common interest of furthering the economy in both countries.

Putin finds an (ways too late) death, the next political leader there discovers that the Russian economy does much better when they export clothes and software instead of already lit rockets.

World sitting together in COP 29 (is it?, I lost counting) and agree to put the effort they put so far into creating and dispensing killing machines into stemming global warming. Easy peasy - all these war funds will be employed to improve / rebuild destroyed infrastructure and ensure people in the hardest hit regions are supported to be able to have a worth while living, stopping as well the refugee problems all around the world.

Likely? No, but boy, would this be a shot into the arm for the stock exchanges ...

Any of these options not coming to fruition? That's the likely option, and I don't think anybody can predict how this global ecosystem will then developing from here.

My best bet though is that humanity will keep fighting on many / most fronts and simultaneously keep destroying our climate. Still - could be an amazing scenario for New Zealand if we manage to turn our country into a safe haven for skilled and/or wealthy people from around the world who want to get away from it all as long as we keep our backwards looking populists under control. Think Switzerland (during WW II) of the South Sea.

If our government manages to stear us there, than clearly things will go upwards (well, for us) .. but whether this will happen already in Q2 2024, I could not say ;

[Basil]

Agree the current situation with geopolitical risk is elevated and its anyone's guess what effect this might have on the markets, but people have been fighting each other for thousands of years and the Bible has many accounts of war so it's nothing new.

My prediction about Q2 is predicated upon the fact that we had an exceptionally strong Q4 in 2023 for most overseas markets.  According to several sources I have seen, what usually follows in Q1 of the following year is a period of market consolidation wherein the market digests, (for want of a better word) and hopefully embeds the huge gains in the previous quarter.   Markets never go up in a straight line and my gut feel, and I admit its little more than that, is we will have a fairly quiet Q1 in 2024.

That said, Barramundi are up 2.5% month to date in January (based off my spreadsheet of their portfolio I updated a few minutes ago) which means their portfolio performance to date in 2024 is going up at an annual rate of 30%+ so who knows.  I'm certainly not complaining.  

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/425320/411585.pdf

Marlin (MLN),ended the quarter with gross performance up 11.0% and an adjusted
NAV return of +10.1%, compared with our global benchmark which was up
8.3%. This brought the 2023 calendar year gross performance to +31.3%,
compared with our global benchmark which was up +19.1%.

Very solid performance.  Noting decent sized stakes in Amazon and Meta both of whom reported very strong results after the close of US markets (our time this morning), with shares up very strongly in after hours trading.

Disc: 8% portfolio allocation.  Bias towards lifting this, (over a period of time), to 20-25%.
Barramundi currently 26% of portfolio.  If October 2024 warrants all exercised that would then be lifted to ~ 50%.

Marlin (MLN) NAV up 3.3% in January, Barramundi (BRM) up 1.4%.  Very satisfactory result for the first month of 2024 considering both funds performed very strongly in the final quarter of 2023.  Love their 8% per annum tax free distributions.  $1m invested generates $80,000 tax free income.
There's bugger all growth in N.Z....as you can see, I'm shifting, potentially the majority of my funds out of N.Z's extremely weak and anemic economy.

[Stoploss]

Discovery Monthly update .
https://discoveryfunds.co.nz/market-insights/discoverys-january-24-update/

[Basil]

BRM closing NAV for the week according to my updated spreadsheet is 76.84 cps up nearly half a cent on the NAV at the end of the month announced yesterday of 76.38 cps.  At last traded price of 73 cents BRM traded at a 4.4% discount.

[Shareguy]

[quote author=Basil

There's bugger all growth in N.Z....as you can see, I'm shifting, potentially the majority of my funds out of N.Z's extremely weak and anemic economy.

Agree. I had a good year last year with my investments only due to investing more offshore. Have also been moving more into managed funds. These are mostly outside NZ investments to give me diversification and more time to enjoy life.

Have realised lately after a few health shocks with friends that life can be very short and I for one want to spend more time enjoying life than researching stocks.

[Basil]

[quote author=Basil

There's bugger all growth in N.Z....as you can see, I'm shifting, potentially the majority of my funds out of N.Z's extremely weak and anemic economy.

Agree. I had a good year last year with my investments only due to investing more offshore. Have also been moving more into managed funds. These are mostly outside NZ investments to give me diversification and more time to enjoy life.

Have realised lately after a few health shocks with friends that life can be very short and I for one want to spend more time enjoying life than researching stocks.

Amen to that mate.  Had a mild heart attack last year and they put me on 3 new meds which tanked my red blood (RBC) cell count so badly for many months there I thought there was a chance I had blood cancer or some other terminal condition.  You start seeing life very differently when you think there's a chance your time is near to its end.  In the end I decided, seeing as I had never had problems before with RBC count in my life before, it must be one of the new meds so threw them all away and unsurprisingly my count is now back to normal.  Need to reduce stress and weight, improve fitness and eat healthier.  Less work, much more walking Tony the Pony and boating going forward, (both those activities are my very happy place).

[winner (n)]

Jeez, Shareguy shifting investing in NZ to overseas ....and Basil as well ....and no doubt others

The hot tip ....... Many doing it based on the increasing   buzz

Hard to say if Shareguy and Basil are talking like the taxi driver ...hard to imagine them being shoeshine guys         

[BlackPeter]

Jeez, Shareguy shifting investing in NZ to overseas ....and Basil as well ....and no doubt others

The hot tip ....... Many doing it based on the increasing   buzz

Hard to say if Shareguy and Basil are talking like the taxi driver ...hard to imagine them being shoeshine guys         

Good point. Some are saying overseas equities are overpriced ... and some certainly are - but then I guess its just a question of dancing close enough to the exit, isn't it?

Having said that - I like diversity. Some funds overseas and enough of them here. I have to admit - last year the overseas funds did better, but who knows what this year will bring? Some say that past performance is not an indicator for future performance, and others prefer linear extrapolation (suggesting the opposite).

Can both camps be right? I suppose it depends on the time window. Lets see how this year goes ...

[Shareguy]

Good point. Some are saying overseas equities are overpriced ... and some certainly are - but then I guess its just a question of dancing close enough to the exit, isn't it?

Having said that - I like diversity. Some funds overseas and enough of them here. I have to admit - last year the overseas funds did better, but who knows what this year will bring? Some say that past performance is not an indicator for future performance, and others prefer linear extrapolation (suggesting the opposite).

Can both camps be right? I suppose it depends on the time window. Lets see how this year goes ...

Agree BP that past performance is not an indicator for future performance. But I guess we all take different views on different indicators and I certainly think past performance is very important. However NZ could surprise many and have a great performance. I certainly hope so.  I will also still be invested in NZ but the majority will be offshore like the super fund or ACC and for that matter many of the managed funds in NZ.

[Basil]

I think the NZX total market cap is less than 1% of the world. 
As you say Shareguy, any serious investment fund like the ones you mentioned has the vast majority of its investments offshore. 
BP, if you zoom out and look at the macro picture, it's hard for companies to do well when there's no growth in the economy here.

[winner (n)]

Saw this comment about US markets ....they could be right

After a historic rally in stocks, permabears got blown up. Now that they're all broke (and some even retired), it's time for stocks to correct.

[Basil]

Well yes that's one way to look at it and yes, I am cautious after a strong run last year but for deeper context, 2022 a bad year for the US markets.  Despite a strong recovery in 2023 the S&P500 only closed last week 4% above where it was on 31/12/2021. ASX isn't in any way out of order relative to previous years but does look like its ready to break out to the upside. as does the S&P 500.
I think the A.I. revolution will supercharge the growth of stocks like Microsoft, Meta, Nvidia and others.

Market cap reflections.
On CNBC on Friday, trading in the "magnificent 7" usually surpasses the total trading in all European markets combined !  Let that sink in.  Really puts the puny and pathetic size of the NZX into context.  More context - Jarden website last week, random day I noticed trading on the NZX totaled $80m, on the ASX $6.5 Billion, more than 80 times the volume !

[BlackPeter]

I think the NZX total market cap is less than 1% of the world. 
As you say Shareguy, any serious investment fund like the ones you mentioned has the vast majority of its investments offshore. 
BP, if you zoom out and look at the macro picture, it's hard for companies to do well when there's no growth in the economy here.

No doubt - if you have lots of money to invest, you need a larger stage. Doubt however whether any of us can move the billions ACC and Superfund have at their avail.

I agree as well that oveseas looks like larger rewards, as ususal coupled with larger risks. There is no free lunch. Have a look at what happend to the Swiss people investing overseas when the Swiss FAnc went overnight 20% up. Ouch. Think about the really big bubbles of the recent decades and what has been left when we woke up the next morning.

And sure - we are not Switzerland - our politicians unfortunately don't have the mental capacity, imagination and fexibility, but apart from that, I think the markets could treat us to a degree simlarly (if our politicians have a light moment).

So - that's the reason I have as much as we need in NZ. Maybe it will grow a bit slower, but it will be around if and when we need it ... and the tax treatment is nicer as well.

Anyway - each to their own.

[Untamed]

I have been pondering the future lately, as retirement is looming within the next few years. I have never invested in managed funds, but I feel that maybe I do need to start thinking about this as an option down the track.

Not asking for recommendations as such, but would be interested to hear how others made/make their decisions about which managed fund to invest in. I am talking small amounts here - maybe $10,000 - $20,000. I still have my very small portfolio, but to be honest, I think I have done my dash with investing in companies. Just not the best option for me now for various reasons.

If anyone cares to contribute, I would appreciate your input.