Fisher Funds stocks

[Fiordland Moose]

Reflected on some of the comments above and found a bit of time post kids nighttime routine to do a slightly deeper dig.

Worth noting that even low-cost ETF's are not free

True that. But VOO's MER is 3bps, or 0.03%, so not really worth while doing the same analysis that I did for Marlin, eh?! Marlin by way of reference charge a base management fee of 1.25%, and still have fund operating costs and performance fees on top of that. Total Marlin fund NAV today was $227.92m. If one accepts the 5 year average total expenses of $3.587m (and think you'd need to do some mental gymnastics not to given in some years it pays a performance fee and some years it doesnt), that gives a MER of around 1.69% - or roughly 56x VOOs management fee.

Saw on a different FF thread that FF LIC's historical discount to NTA traditionally pretty small - thus mkt does not price in the mgmt fee component or my belief. Yup, I'd say that's true. And that's another reason why Marlin's total shareholder return underperforms the S&P500 (or in my case VOO) as they are paying an economic premium (per my previous analysis) for worse overall return.

Comparing Marlin to an S&P500 ETF is comparing apples with Nashi pears because a lot of their investments are NASDAQ type or outside America

Of the 21 stocks listed below, 17 are S&P 500 constituents. Marlin's top 5 representing 35% of the fund are all S&P500.  Of the tech stocks you allude to, all but 1 (Tencent) are S&P500 constituents, with all Marlins big other tech holdings (Amazon, Alphabet, Microsoft, Meta, Saleforce, netflix, etc) certainly on the S&P500.
https://marlin.co.nz/investor-centre/portfolio-holdings/
So its basically a concentrated S&P500 fund, with different weights, higher management fees, that have produced worse returns (per below).

I have little doubt that based on your experience and from a certain point in time when you invested in that ETF, you feel your performance exceeds Marlin but nevertheless they have stated their performance on their website relative to the index and I have no reason to doubt their claim.  Their fund is tech heavy and its worthwhile noting the Nasdaq has actually done a round trip to nowhere in the last 2 years.

So I believe it's pretty well established the appropriate benchmark for Marlin is VOO, regardless of Marlin's self assigned "benchmarks".  used the sharesight share checker and dropped in ALL the available dates to do a total returns analysis (capital gains, dividends, currency - ie Sharesight assumes a purchase of VOO at the prevailing FX and what it is now). Haven't fiddled with any numbers and only goes back 10 years as VOO wasn't launched until like 2010 (and 14 years sadly wasn't an option).

      Marlin     VOO
L10Y  8.39%   16.10%
L5Y    11.38%   18.0%
L2Y    (4.18%)   17.63%
L1Y    26.10%   39.18%
L6M    12.71%   23.36%
L3M    8.36%   16.97%
L1M    2.89%   7.14%

So yeah I think the performance delta is very clear. There are some caveats to the above. Marlin has an inefficient FIF tax structure in that it always must pay the FDR tax (regardless of circumstance). An individual holder investing into VOO directly whose aggregate FIF shares never exceeded 50k wouldn't have to and those returns would be right. For a larger holder, they would in most years have to pay FIF tax, and could choose between the FDR and CV methods (and one other I forget). In a downyear the taxpayer could use CV, or FDR where it suited. That comes down to individual circumstance, but even for a large holder, VOO's outperformance is such that the FIF tax really isn't going move the needle in terms of closing the gap and I'm not going to waste my time doing the math.

There are lots of benefits to Marlin as Basil talks to but they are on the softer side of things, from my perspective.

Now going forwards - that's interesting. I've been exploring equal weighted S&P500 indices as traditionally (pre the last few years) they have outperformed the quoted index. The S&P500's outperformance relative to the equal weighted index now the greatest ever, and historically after a year or two of outperformance, things tend to revert back. But the ironically part of wanting to invest into the S&P500 is I don't have to try to be smarter or dumber or take a different strategy to the market (I want the mkt to decide for me) - electing a wholesale different weighting is doing just that, and who knows maybe the market could be right with the whole AI revolution and magic 7? I certainly don't know.

A report on the equal weighted index below from June 2023 - bit dated, but topical. Sadly, MERs for equal weighted ETFs are higher than the mcap weighted ETFs, but compare favourably to smartshare equal weighted costs.

https://www.spglobal.com/spdji/en/documents/research/research-more-equal-than-others-20-years-of-the-sp-500-equal-weight-index.pdf

Don't mean to poo poo Marlin (and not familiar with any other FF product) - I understand the benefits and think its a great exposure outside the NZX - but I think it an honest, eye opening comparison of what it purports to be vs what else is available in the same swimming lane.

[Basil]

I'm not going to double check your figures but it's important to realise that the Fisher Funds group calculate their performance based on the NAV movement + the 8% dividends and they assume you reinvest those dividends at the 3% discount, + the net value of warrants issued . Share sight will not have picked up those two factors which renders your comparison, flawed.

I think the recent announcement by Kingfish in terms of their performance over the last 20 years answers the question of whether they earn their fees as that removes any argument about whether the NZX50 is a fair benchmark for their Kingfish listed fund.  As mentioned recently, I have a much longer history with Barramundi and their market outperformance after fees and tax of 5.4% per annum average is nothing short of brilliant.  Definitely something to toast at their annual meeting where, by the way, they put on a very good lunch each year.

It has to be said, I'm not fond of the methodology they use to calculate their performance fees.  It should be on index outperformance.  That said, they are the only fund manager I know that has a reducing base management fee, (reduces as low as 0.75% per annum) if they underperform.

Marlin have had some issues with poor stock selection of risky banks and Chinese companies in the past, (their 3 year performance reflects that) but I think their current portfolio looks pretty good to me and is well positioned to ride the A.I. revolution.  I note they are up just on 30% in the last year.  https://marlin.co.nz/investor-centre/portfolio-performance/

I first bought in decent volume at 86 cents in early December and together with the 3.69 cps in dividends since then and the 14 cent share price appreciation am up 20.6% since, on my original purchase, (I have added more this year).  I noted this morning on CNBC, if my recall is any good, the S&P500 is up just on 11% year to date in 2024 so it's fair to say I am a very happy camper, although, its early days.

The Kingfish group is set up to attract income investors.  Those looking for growth such as yourself, may prefer to look elsewhere.
My approach is that if I can buy into Barramundi or Marlin, (I paddle my own canoe in N.Z. and have only a very small holding in Kingfish) at a ~ 7% discount to NAV my return becomes not 8% tax free but 8% / 0.93 = 8.60% and then taking the shares in lieu at a 3% discount this becomes an effective tax-free yield of 8.60 / 0.97 = 8.87%.  On top of that are two things, firstly the value of the free warrants issued and the value I create for myself with looking for opportunities when they are mispriced.  Just sticking with the 8.87% net yield, that alone to me is worth a yield of 8.87 / 0.61 = 14.54% gross, (it helps keep me out of the 39% tax bracket so I have used the marginal tax rate of 39% for income over $180K).

I find that extremely attractive.  $100K at 8.87% net is obviously $8,870 tax free.  Multiply that $100K by whatever factor you can, or feel comfortable with, and obviously this is a very powerful income generating investment vehicle for those with significant means.

On the equal weight v standard S&P500 thing, according to some experts if you take out the magnificent 7, (is it 6 now that Tesla are looking less robust ?) the S&P is only on a forward PE of about 15, about 21 including.  Anyone's guess which methodology will provide better gains going forward.

We live in a very low growth economy here in New Zealand with very limited exposure on the NZX to high growth tech companies.  In my opinion it's really important no matter which investment vehicle or methodology you use, to invest a significant portion of your capital outside N.Z. 
I think I've articulated why Marlina and Barramundi are better suited to me in my early 60's looking to replace working income with passive income.   
I also really like the returns and optionality the warrants confer as do all the other investors I have spoken with at annual meetings from time to time.
Why invest in Marlin.  https://marlin.co.nz/about-marlin/why-invest-in-marlin/

In conclusion from my perspective, investment in decent numbers into Barramundi has been very rewarding over the years and I am confident going forward I will enjoy the same experience with Marlin, certainly the early returns have been very encouraging.  I don't want to be doing much investment analysis in my 70's and certainly no FIF calculations then lol  The one stop shop Kingfish provide with these funds are ideal for me....more time catching real kingfish from my boat or walking my dog and less time with investment analysis, frankly, what's not to like lol.
I might add another fund manager into the mix in due course as well as some emerging markets exposure as interest rates start to decline, we'll see.

So yeah I think the performance delta is very clear. There are some caveats to the above. Marlin has an inefficient FIF tax structure in that it always must pay the FDR tax (regardless of circumstance). An individual holder investing into VOO directly whose aggregate FIF shares never exceeded 50k wouldn't have to and those returns would be right. For a larger holder, they would in most years have to pay FIF tax, and could choose between the FDR and CV methods (and one other I forget). In a downyear the taxpayer could use CV, or FDR where it suited. That comes down to individual circumstance, but even for a large holder, VOO's outperformance is such that the FIF tax really isn't going move the needle in terms of closing the gap and I'm not going to waste my time doing the math.

P.S. As noted above you haven't calculated the performance correctly as you've completely glossed over the value of the free warrants.  You're also overlooking that some people pay a lot of money in compliance costs with FIF calculations.
Its a shame no government have reviewed the de-minimus level of $50K for FIF compliance since it was set a very long time ago, ($100K if split with your partner).  That might have been a pretty meaningful sum of money for foreign investment way back when it was set, but it's certainly not these days.  That forces a lot of people with even moderate means into considerable compliance costs which is pretty unfortunate....not complaining from my perspective.

[Basil]

New Warrant Issue for Marlin.  http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MLN/430211/417466.pdf

[winner (n)]

My mate Michael says - I guess clients will decide whether they want to continue to do business a firm that has kept in a senior role someone with such evidently poor impulse control


https://www.stuff.co.nz/nz-news/350293132/fisher-funds-manager-revealed-man-acquitted-auckland-neighbourly-scrap

[snapiti]

My mate Michael says - I guess clients will decide whether they want to continue to do business a firm that has kept in a senior role someone with such evidently poor impulse control


https://www.stuff.co.nz/nz-news/350293132/fisher-funds-manager-revealed-man-acquitted-auckland-neighbourly-scrap

Having experienced ignorant bad neighbour's myself, overall very long period, and can also say it is not hard to snap eventually....anyone even responding to this report without knowing the full facts is a w$#%ker IMO

[Basil]

You could say after much provocation he simply Snapped, eh Snapper, (sorry, couldn't resist the word play).

[Sideshow Bob]

https://www.nzx.com/announcements/432510

Kingfish Limited (Kingfish) wishes to advise all Kingfish Warrant Holders (KFLWH) that the final exercise price of the Kingfish warrants is $1.26.

Further details regarding the Kingfish warrants, which have an exercise date of 26 July 2024, will be emailed/mailed to all warrant holders before the end of June 2024.

[BlackPeter]

Having experienced ignorant bad neighbour's myself, overall very long period, and can also say it is not hard to snap eventually....anyone even responding to this report without knowing the full facts is a w$#%ker IMO

Hmm - so, this bully jumped over the fence onto the neighbours property (whom he first annoyed with playing the macarena), did beat up the neighbour, damaged (or destroyed the eyesight of the neighbour he attacked) and then got acquitted for "self defence"?

Anybody playing the Macarena loud enough that neighbours suffer should be shot, even if they don't double down by beating afterwards the sh*t out of the neighbours they first molested.

Hard to believe what they call justice in this country. I guess it seems we are great in locking up innocent people for decades (Banes, Ellis, Pora, ...) , but on the other hand we discharge dangerous bullies without any self control injuring their neighbours. I have seen bad neighbours as well, but our justice system clearly seems to trump bad neighbours, it is a sad joke.

Not sure, though whether any of that would change my investment behaviour, though - I am clearly over Fisher Funds (but for other reasons than employing people without impulse control as investment managers).

[Left Field]

Ssssooo how did buying the KFLWH's work out for holders? ( KFL trading last Friday at around $1.20 v exercise price of $1.26?? )

[snapiti]

I see KFL is trading at a 10% discount to NAV.....seems high.

[FatTed]

Ssssooo how did buying the KFLWH's work out for holders? ( KFL trading last Friday at around $1.20 v exercise price of $1.26?? )

I guess if you bought a couple of hundred @ 1.26 it would be cheaper because no brokerage cost

[Basil]

https://www.nzx.com/announcements/434719

Wow, 12% discount to NTA at $1.21!

This is such a great opportunity I feel like Oliver Twist with my begging bowl held out at $1.21, please Sir, can I have some more?

[Dolcile]

Basil, why do you suppose there is such a discount to net assets? Any idea what level of discount / premium Kingfisher has traded at historically? Thanks

[winner (n)]

Basil, why do you suppose there is such a discount to net assets? Any idea what level of discount / premium Kingfisher has traded at historically? Thanks

here's what the discount/premium has looked last 10 years

You cannot view this attachment.

[winner (n)]

Opportunity abounds

They say with rates declining etc etc NZX to take off ...and KFL will follow

Let's say +30% increase in NAV by end of next year and punters get really excited and KFL gets rewarded with that 10% premium again

Share price about 2 bucks ...and you've collected divies along the way ....and probably have some valuable warrants to boot