Smart Investor: Earning It, October 2011

Smart Investor, October 2011

ROADTEST

ING Global Property Securities Fund

Who runs the fund? ING, but the underlying manager is CBRE Clarion Securities, one of the largest global real estate investment teams in the world.

The basics: Invests in global real estate stocks and measures itself against the S&P/UBS Global Real Estate Investors (ex Australia) index. Hedged for the currency.

The process: Picks a diversified pool of stocks, typically 80 to 110 from an investment universe of 800. Bottom-up approach to security selection but sets regional and sector allocation after reviewing market conditions and trends. Has a team in Philadelphia, London, Tokyo, Hong Kong and Sydney making stock selection.

The bottom line: Being hedged has helped enormously. That, with good stock selection, has made it the second-best global real estate fund in Morningstar’s coverage, returning 27.35% in the year to July 31, though a more modest 3.56% a year over three years and 1.76% over five.

Fees: 0.9%, but this is a wholesale fund so you will have to buy it through a platform which will have its own administration fee.

Verdict: Successfully caught the rebound over the last year and got on the right side of the currency. As America looks flat again, can it continue to thrive?

NEW FUND

Taurus Enhanced Gold and Precious Metals Fund

What is it?

A precious metals fund.

Which ones?

Gold, silver, platinum and palladium – both as physical commodities and through precious metal equities. That includes, for example, gold miners. It aims to outperform physical gold bullion.

Is it a good time to invest in precious metals?

Gold is at a record high – but is it going higher? Gold thrives in dicey economic situations like now, when investors look for safe haven assets. The question you want to ask is whether, having run so far, it has any further to go or if the great gains have already passed.

Gold has been great in US dollars but not Aussie dollars. How does that affect this fund?

The fund is denominated in US dollars but you can also apply in Australian dollars. Somewhat unhelpfully, the product disclosure statement says: “The investment manager may choose to hedge or not hedge currency risk.” In recent years the decision whether to hedge or not can have made as much as a 30% difference to returns for Australian investors in precious metals, so it’s a rather crucial point.

Who runs the fund?

The investment manager is Taurus Funds Management, a Sydney-based group specialising in resource fund management. Its main people are Brenton Saunders and Mohendra Moodley. The fund will be accessible to Australians through Equity Trustees.

What are the costs?

1.5% per year plus a 10% performance fee for outperformance over the benchmark (bullion).

GIZMO

HP TouchPad

Apple doesn’t have the computer tablet market completely to itself, and in August HP brought its own TouchPad to Australia.

You’re never going to trump an iPad on style, so what’s HP got? The big difference is its operating system, called webOS. HP argues that this particular OS is the best for multi-tasking – which all of us do more and more of these days. Early reviews suggest HP will find it tough going in an already crowded market, particularly since it has nothing like as many apps as an iPad (not yet, anyway). But, the more the merrier, and competition is good

FUND WATCH

Platinum International Healthcare Fund

We don’t get a lot of exposure to healthcare in this country – we’re a resources and financials sort of a place. This fund seeks to fill the gap, and has done exceptionally well viewed as a global equity product. With world stock markets down 2.31%, the Platinum fund is up 14.44%, and it’s not a one-off, with significant outperformance over three and five years too.

The fund is dominated by Swiss, American and European familiar names like Roche, Sanofi, Johnson & Johnson and Merck. But there is room for some less familiar names too.  Gilead Sciences, for example, is a biopharma company with just 14 marketed products, including treatments for HIV infection. And Teva may well be the only stock in your portfolio to be headquartered in Israel.