Fisher Funds stocks

[Mos]

Thanks Basil, have to agree with you on that one - looks like high fees/costs for mediocre performance and trading at a premium as you say. I don't get the sense they have any competitive advantage investing globally as they possibly do in NZ.

[Basil]

No competitive advantage, agree 100%.  In many ways they handicap themselves with not being proactive but in many instances also not even being reactive.  Does being paid fat fees for just reading analyst reports and then set and forget investments for 10 years plus regardless of what happens, really cut the mustard in 2023 ?

[Mos]

That job you described sounds pretty attractive. Should have thought of that as a career option!

[Shareguy]

Interesting to hear this indirectly and not from Fishers themselves. Very disappointing given all out family's Kiwi saver are with Fishers.

Have not been great results compared to others lately either. Looks like after reading this, downside to continue.

Might be time for a change?

https://www.newsroom.co.nz/fisher-funds-loses-80m-in-bank-collapse

[Gerald]

If I remember correctly these guys also had a huge position in Wirecard for years

Maybe the pros should spend more time researching and doing DD/analysis rather then staring at a Bloomberg terminal.

[Basil]

Thanks Basil, have to agree with you on that one - looks like high fees/costs for mediocre performance and trading at a premium as you say. I don't get the sense they have any competitive advantage investing globally as they possibly do in NZ.

I have a small holding in KFL at this point in time as it adds to the diversification of my portfolio and frankly, they have more patience than I do with holding their shares in long term growth companies like IFT.  I only ever add when KFL trade at a discount to NTA like they did on Friday closing at $1.32 with a last reported NTA of $1.3823 (4.5% discount) and I know the market has moved up since that NTA was measured so it will be interesting to see the size of the discount when the end of month NTA is announced tomorrow.  They recently changed their buy-back policy such that they can buy-back their own shares when they trade at a 6% discount to NTA (formerly 8%). I think the current share price is probably getting close to that new threshold and underpinned by a potential buy-back going forward.  I use the DRIP to get a 3% discount on the quarterly dividends.  There should be a new warrant issue coming up for KFL soon.
Warrants can be a fun instrument to work away with in a rising market, not so much in a falling market and I have a truckload of worthless Barramundi warrants that probably won't be worth exercising next month.  (Previous issues of BRM warrants have been very good for me so one has to be philosophical at times like this)
I know it's easy to replicate their portfolio buying the shares on the NZX but if you're buying KFL at a reasonable discount to NTA it seems like a reasonable strategy to me.

[Mos]

That does make sense Basil, your approach of adding when at a reasonable discount to NTA. From memory the costs of running the fund including base fees and performance fees is around 2%+ p.a. of FUM. A small part of this can be offset by the pie tax rate of 28% vs 33%/39% and the fact that FF can trade freely without worrying about being subject to cap gains tax under the pie regime. However approx 2% cost disadvantage vs DIY is a sizeable hurdle to overcome in my view. The long term record of the respective FF companies suggest that in NZ their local knowledge/access may give FF a chance of overcoming the hurdle.

[Basil]

Latest NTA just on $1.40 and share price at a 6% discount to that at $1.31..some big trades today at $1.30.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KFL/409618/392247.pdf
Probably underpinned by their share buyback program at these level's.  Amended buy-back program announcement here
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KFL/402574/383680.pdf

[Shareguy]

Good for diversification. Fees ? Another option would be smart shares.

https://moneykingnz.com/smartshares-superlife-review-the-smart-way-to-invest-in-shares/

[Basil]

Fair bit of noise on the other site about the discount to NTA KFL are trading at, circa 8% so here's my 2 cents worth, remembering that KFL themselves can buy back the stock at anything more than a 6% discount to NTA now as noted in my earlier post in this thread.

I agree 100% its a good opportunity at that level and have been actioning that with significant buys at $1.29 and $1.30  I see it as a good opportunity to acquire a range of high-quality companies in their portfolio at an ~ 8% discount to NTA.  Their portfolio adds significant diversification to mine and also allows me to buy high quality growth companies like SUM, MFT and IFT at an 8% discount to their current share price and still achieve my objective of a minimum of 8% return on my portfolio.  Actually get 8.7% net (8 / 0.92) when buying at an 8% discount to NTA which can be boosted to 8.97% net (8.7 / 0.97) if you take shares in lieu of dividend at 3% discount like I do.  ~ 9% net = 13.43% gross for 33% taxpayers so you can see why a dividend hound like me is very interested in this.  Quarterly distributions for this group are also cool.
Have also added quite significantly to my stake in Barramundi in recent weeks as well, at slightly below NTA.
KFL share price well underpinned by the buy-back at these level's.

I'm not going to respond to some jibes that this is better than HLG or TRA or other high yield income stocks other than to note there are many different ways to skin a cat.

Ronaldson asked a question about whether Trustee's with their trusts would be better off investing in PIE's with the forthcoming 39% tax rate for Trusts.
Yes absolutely.  There's going to be a whopping 11% difference in the tax rate from 1 April 2024, PIE final tax rate is 28% v investment income received direct to a Trust and tax at the new Trust rate 39%.  I think this makes PIE investment for Trusts extremely attractive.
More info on the PIE thing for Trusts is available on the IRD website here https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/income-from-portfolio-investment-entities-pies/portfolio-investment-entities-and-trustees

[Basil]

I would add that KFL has proven its ability to generate the yields noted above over the long run because its current NTA is well north of the float price of $1.

Those who are retired or semi retired like me, or people who simply want tax effective high income couldn't care less, (tell someone who cares, I don't), where their income comes from as long as it keeps coming and their capital is not being eroded.

[Nizzy]

Looking across the ditch, any thoughts on BRM Barramundi as an easy way to cover the ASX? 
Price is sitting v slightly above NTA. Not a compelling discount like KFL, but not out of the ball park either. 

[Basil]

Welcome to the forum Nizzy.
BRM's portfolio is much better diversified than KFL's and yes, if you're buying at NTA or slightly below I think its a great way to add diversification to your N.Z. portfolio.  I've been very busy buying at slightly below NTA at 69 cents recently. 

[Mos]

I would add that KFL has proven its ability to generate the yields noted above over the long run because its current NTA is well north of the float price of $1.

Those who are retired or semi retired like me, or people who simply want tax effective high income couldn't care less, (tell someone who cares, I don't), where their income comes from as long as it keeps coming and their capital is not being eroded.

Good point re KFL. Doesn't apply to BRM or MLN though - both below $1.00

[Basil]

A blended average of the three would see you pretty much square over the long run.
For older investors looking for tax free retirement income and those looking for income and on a 33% or 39% tax rate, these make a good case for themselves.

Some tax payable on shares due to the FIF regime possibly explains some of the underperformance of BRM and MLN relative to KFL, but I suspect they know their home market best and that's also a factor.

The warrants can be a lucrative way to play there for those that know what they're doing and how to price them.  That said I got left with a few hundred thousand worthless BRM warrants this month that cost me just on $10K so they're not always a winner. 

I like the opportunity that presents itself from time to time to buy at a decent discount to NTA and also that they have more patience than I do to hold their long term growth stocks. 

Just as an aside, each of these companies also put on a pretty good lunch after their annual meetings.