Smart Investor: Earning It, February 2013

Smart Investor, February 2013

Roadtest

Van Eyk Blueprint Gold Bullion Fund

Who runs the fund?

Van Eyk, which was originally better known as an independent research group before branching into investment management directly.

The basics: Simple. Invests in gold bullion. The idea is that gold represents a hedge against inflation, and diversifies the portfolio. Plus, it’s been going up.

The process: Many gold funds invest in shares of gold miners as well as the physical method. This fund doesn’t, arguing that doing so brings too much correlation to other financial assets.

The bottom line: Lately, simple has been good. In Morningstar’s ranking of commodity funds, this ranks top over three years, at 14.19% a year, although it’s down 1.86% in the year to November 30.

Fees: 1.04%. That’s less than most equity funds, but one might argue it’s a little steep for a fund that makes no investment decisions.

Verdict: Bullion’s advantages – diversification in particular – are valid, but it’s not at all clear where gold goes next after several years of strong performance and then one year of relative stagnation.

New fund

Threadneedle  Global Equity Income Fund

What is it?

A global shares fund focused on generating income.

Everybody seems to say that these days: equity income. Don’t all equities generate income if you hold them long enough?

It’s all about yield. An equity income fund focuses on steady earners that pay a good dividend. There are two reasons you hear about this approach all the time now. One is that the usual providers of a steady yield – bonds – are offering extremely low returns these days. The other is that more and more investors are looking for something that suits them in retirement or semi-retirement, with a combination of growth, stability and predictable payouts. This one achieved a yield of 5.6% for the 12 months to September 30.

Is that good?

It is in global equities. We get complacent in Australia because we have some of the highest dividend blue-chip stocks in the world. This fund offers a good yield as well as global diversification.

Who’s behind the fund?

The local name offering it is called Certitude Global Investments, but the manager is Threadneedle, a big name in European fund management. The fund that this new Australian products feeds into has beaten its benchmark (MSCI AC World Index) over every timeframe from one to five years, although that is gross of fees. The person in charge is called Stephen Thornber, based in London.

What about currency?

This fund is unhedged, so you’re fully exposed to movements in the currency. It is very important to be comfortable with this before considering an investment. If the Aussie dollar weakens, you do well from this; if it strengthens, your gains could be wiped out in local terms.

What exactly does the fund look like?

International equities, usually between 75 and 95 stocks. No constraints on where those stocks need to be held, so it is a diverse mix geographically and by sector.

What’s it cost?

A management fee of 1.15%.

GIZMO

Mophie Universal Powerstation Pro

When a battery is not enough, and you’re nowhere near a power source, you need some oomph. There are quite a few varieties of oomph out there these days but this one, from American manufacturer Mophie, is as good as any.

It’s pretty straightforward: a pack of battery power with a USB port outlet, it is resistant to water, dust and being dropped. It can provide 6,000mAh (the metric for free-standing battery gizmos) and frees you to head for the wilderness without losing power.

Fund watch: Zurich Investment Property Securities Retail

Property securities funds tend to look wonderful over one year, handy over three and nightmarish over five; it’s all about when you got in. This Zurich fund matches the trend perfectly, but has beaten the benchmark over all three timeframes.

It’s almost impossible for a property fund to avoid a heavy holding in Westfield, and the stock accounts for a quarter of the Zurich fund not counting the near-10% holding in Westfield Retail; equally obligatory Goodman and Stockland add almost another quarter between them. The variety from the herd comes further down the top stocks list, with names like Ardent Leisure. Retail dominates the fund but it is diversified across the property spectrum.