BRM - New Warrant Issue for Barramundi

[Untamed]

Does anyone know if you can exercises the warrants via Sharesies?

Yes, you can (assuming you hold them in Sharesies).

Why wouldn't just go here and hand over your loot. Do you have a CSN?
https://www.warrants.co.nz/barramundi

Sharesies is a custodial service. You cannot do anything within Sharesies under your CSN. So he needs to exercise them via Sharesies OR transfer them out first, then exercise via your link or directly via Computersharer.

[Basil]

If NTA goes over 81 cents next week it's going to be really hard to resist buying even more warrants even though I have a truck load already.

Talk in the media today of a possible 75 bps OCR cut by the RBNZ in late November.  Makes sense to me seeing as the current rate of 4.75% is still very restrictive, the economy is extremely weak and RBNZ don't meet again for another review for 3 months after that.

Got to thinking today when the Reserve Bank of Australia (RBA) might start cutting.  Their rate is currently 4.35%, which perhaps explains why their economy is not completely in the toilet like our's, and they meet again to review it in early November.
https://www.rba.gov.au/

Despite the 50 bps cut this week by RBNZ and the possibility of a deeper 75 bps cut in late November, I still believe the Australian economy will easily outperform N.Z. for the foreseeable future.  Makes sense to have a sizeable portfolio allocation to Australia in my opinion.  My preferred exposure, (by quite some margin), is through the super high performing Discovery fund but that fund is now closed for further investment, so Barramundi is coming in for quite a lot of my attention.

[Dolcile]

Hi Basil.    In terms of Australia exposure, have you given much thought to an ASX200 index fund - as opposed to BRM?

[Dolcile]

Yes, you can (assuming you hold them in Sharesies).

Sharesies is a custodial service. You cannot do anything within Sharesies under your CSN. So he needs to exercise them via Sharesies OR transfer them out first, then exercise via your link or directly via Computersharer.

Great thank you

[Basil]

Hi Basil.    In terms of Australia exposure, have you given much thought to an ASX200 index fund - as opposed to BRM?

Yes but I would prefer to buy assets at 84 cents on the dollar than full price.

[snapiti]

If NTA goes over 81 cents next week it's going to be really hard to resist buying even more warrants even though I have a truck load already.

Talk in the media today of a possible 75 bps OCR cut by the RBNZ in late November.  Makes sense to me seeing as the current rate of 4.75% is still very restrictive, the economy is extremely weak and RBNZ don't meet again for another review for 3 months after that.

Got to thinking today when the Reserve Bank of Australia (RBA) might start cutting.  Their rate is currently 4.35%, which perhaps explains why their economy is not completely in the toilet like our's, and they meet again to review it in early November.
https://www.rba.gov.au/

Despite the 50 bps cut this week by RBNZ and the possibility of a deeper 75 bps cut in late November, I still believe the Australian economy will easily outperform N.Z. for the foreseeable future.  Makes sense to have a sizeable portfolio allocation to Australia in my opinion.  My preferred exposure, (by quite some margin), is through the super high performing Discovery fund but that fund is now closed for further investment, so Barramundi is coming in for quite a lot of my attention.

I totally agree with you Basil, 95% of my Share market investments are offshore, 80% is in Aus.
Although this means getting up to speed with the FIF tax rules. I am sure you are up to play with this.
I research a lot but now a days 90% of my holdings are in funds like BRM rather than individual stocks, still much research is required even into these especially understanding the tax obligations.
I find the whole FIF tax rules bizarre and it took sometime to understand the pro's and con's of the rulings on each of my offshore investments.
One needs to get a good handle of these tax rules to fully understand their own net return positions.
Not wanting to go off topic to much but I find it is fascinating that one has a multiple choice option when applying the FIF tax rules as long as the one you choose is used for all your FIF investments in the same year.
BRM as a company/business are subject to the FIF rules however my understanding is this is all taken care of by the company and as individual investors BRM is treated as a PIE investments.
There is some notes on their website about this.       

[Dolcile]

Hi Snapiti, I'm similar to you, mainly invested offshore.  Except, mostly US rather than Australia. 

Kernel have a good guide to taxes here

https://www.myfiduciary.com/uploads/1/1/3/9/11394355/tax-paper_final-digital-v2.pdf

I'm 75% US, 10% NZ and 15% rest of world.   Looking at BRM for some tilt toward Australia. 

[Basil]

FIF is hard work eh Snapper. Yes Barramundi and Marlin are PIE's so there's absolutely nothing investors need to do in terms of their compliance requirements.  This saves investors spending thousands each year with their accountant, which by the way is fine with me because I hate that sort of work.

Hey Dolcile. S&P 500 at 21.4 times forward earnings looks a bit expensive to me but take out the magnificent 7 and the other 493 are in the mid teens so probably okay.  Are you in ETF's there?

[snapiti]

Hi Snapiti, I'm similar to you, mainly invested offshore.  Except, mostly US rather than Australia. 

Kernel have a good guide to taxes here

https://www.myfiduciary.com/uploads/1/1/3/9/11394355/tax-paper_final-digital-v2.pdf

I'm 75% US, 10% NZ and 15% rest of world.   Looking at BRM for some tilt toward Australia. 

Have a look at RF1 in Aus, I have a large holdings in this and the 5 years performance has been excellent, they are not exempt to the FIF tax rules however they pay their dividends with no franking credits so the 5% FIF tax rule is very handy in this case.

[snapiti]

FIF is hard work eh Snapper. Yes Barramundi and Marlin are PIE's so there's absolutely nothing investors need to do in terms of their compliance requirements.  This saves investors spending thousands each year with their accountant, which by the way is fine with me because I hate that sort of work.

Hey Dolcile. S&P 500 at 21.4 times forward earnings looks a bit expensive to me but take out the magnificent 7 and the other 493 are in the mid teens so probably okay.  Are you in ETF's there?

yep I was struggling to understand all the different FIF tax rules and options, ended up paying my accountant to explain, money well spent.

[Dolcile]

Hey Dolcile. S&P 500 at 21.4 times forward earnings looks a bit expensive to me but take out the magnificent 7 and the other 493 are in the mid teens so probably okay.  Are you in ETF's there?

Hey Basil.  No, my vehicle of choice is the Simplicity Global Share Fund.  I like it because:

1. It holds the shares directly, so the manager is able to claim a credit for any tax withheld on foreign dividends.  This is a major disadvantage of funds holding other funds (like some of the smartshares funds)
2. They are mostly passive other than the ESG exclusions
3. The management fee is a lowly 0.15% pa
4. The fund is largely the S&P500 (73% of the fund) but also has some other developed market exposure (Europe, Asia and Australia)
5. It's a PIE so all the tax is taken care of
6. There is a hedged and unhedged option

And pleasingly the returns have been great, 31.6% for the 12 months ending September. 

As for the P/E ratio.  I just want to own a good slice of the global market.  Plenty of active managers didn't invest in some of the M7 and their performance has really suffered.  I haven't done a comparison but I will make a not to compare the Simplicity GSF performance against Marlin. 

[Whome]

https://wealthmorning.us19.list-manage.com/track/click?u=9d259e9a2dd239d60b3e1798a&id=e8fc2fa920&e=4a7e0bd097

Another perspective on Tax on Global Shares

[Basil]

Thanks Dolcile that looks like an interesting option.  Certainly, the fee level for a PIE is very low and will save a lot of people doing complicated FIF calculations themselves or more likely paying their accountant thousands.   On their website the return to 30 Sept (I have chosen their unhedged fund as I want to eliminate exchange rate gains from my consideration, is showing as 26.28% after their fees but before tax.  I just looked into it anmd it was 25.19% after fees and tax.   Very good but no 5 year history to work off as it's a new player in that field starting in April 2023.

By comparison the Smart shares total world fund is up 20.27% over that tiemframe https://www.smartinvest.co.nz/funds-and-performance/etfs/international-shares/smart-total-world-etf  I tend to focus a lot on the 5 year performance because to me that gives a better idea of across the cycle returns, although in recent times that encapsulates a lot of the Covid era headwinds.  I see the TWF is 10.13% after fees and tax per annum, average over 5 years.

Yes, it's been a great year for international equities but that 5 year average return of about 10% is probably about where I think investors should set their expectations going forward.  Simplicity does look like an attractive way to quite simply and very cost effectively diversify one's portfolio.  I might throw them a bone in due course.  I've been very disappointed with Marlin lately, (I have very recently sold out), and not sure how they seem to pick and keep holding losers and manage to "successfully" avoid picking Nvidia to name just one stellar performer.  Marlin is also a very poorly diversified fund.
Returns over the last few months and last year for that matter have been very disappointing and well below what you have been enjoying.  Even their 5 year performance is just below the total world fund smart share so there is no longer any evidence, (there used to be), over the medium term they can out pick the market.  I'm not sure I really rate Sam Dickie.  Anyway, leaving that debate aside as to whether Marlin add's any value, (I used to believe on the available evidence a year ago they did), there is no argument that the Simplicity fund or the Total world fund offers vastly better diversification and therefore lower risk.

Thankfully Barramundi is a different kettle of fish, (sorry couldn't resist the pun), and they have easily beaten their benchmark over the last 5 years, which is my standard timeframe scope of reference for all shares and funds.
https://barramundi.co.nz/assets/Investor-Centre/Barramundi-Monthly-Update-September-2024.pdf
Robbie Urquarts performance speaks for itself and buying their long-term outperformance at a ~ 16% discount to NTA seems like a truly compelling opportunity to me which is why I have well and truly backed the truck up on their warrants.

[Dolcile]

Hey Basil, 

Picking up on your 5 year point.  I think the track record of returns is more relevant (and I'd argue you need longer) when considering managers that are actively picking stocks. 

For passive, globally diversified funds - even without 5 years of data - as long as I understand the benchmark/index that they are tracking, I'm happy to invest and take the average market return. Provided of course that the management fees are low and the fund structure is tax efficient. 

The data shows that over a 30 year period less than 1% if active managers outperform the index.  And because my investing horizon is (hopefully) 50 years for myself and another 90-100 (hopefully) for my young children, I'm happy with the long term average market return. 


Regarding BRM, later tonight I am going to have a look at 15-20 years of their returns v the index to see if they really have been able to outperform over a sustain period - after expenses and management fees. I'll post the results. 

Separately, I did notice last night that the share price discount to NAV was around 15% for quite a sustain period between 2010-2013, I'm not sure why that was, but who's to say that won't happen again?

[Dolcile]

Also, just regarding the "new player"
comment.  Whilst your are correct that the GSF has only be around since April 2013, Simplicity has been in operation since 2016. 

Also another benefit of the Simplicity fund is that there is no Buy / Sell spread so you aren't getting pinged on each transaction.