Smart Investor: Up to speed, March 2008

ROADTEST

Dimensional Australian Small Company Trust

Small cap fund with proven long-term track record

PERFORMANCE

Outstanding. Over the five years to December 31 it had returned 26.76% a year. Naturally, more recent times have been tougher: according to Morningstar the fund was down 10.54% in the six months to January 31 (which was, believe it or not, the seventh best out of 57 small cap investment options in Morningstar’s database) but it is still positive for the last 12 months and has proven its ability to bounce back from the bad times.

HOLDINGS

When last disclosed on December 31, the biggest were Bendigo Bank, Jubilee Mines, Flight Centre, Transfield Services and David Jones. As you can see these are not the smallest of small caps: in fact there is a minimum market cap, of $50 million, for stocks.

EXPERIENCE

You could write a book on Dimensional, but the basics are that it uses an approach based on what it calls “the science of the capital markets” [there are world-renowned professors on the payroll] rather than more common stock-picking methods. It takes small positions in lots of companies to reduce volatility. Globally, it has been active in this style since 1981.

FEES

Management fee is 0.513% per year with a transaction costs allowance of 0.2% on entry and 0.15% on exit, if you buy directly from Dimensional, but the very high minimum investment levels mean you’re more likely to buy through a wrap or mastertrust, which will levy a platform fee too.

GRIPES

The typical gripe about Dimensional is that their theories fly in the face of most active portfolio managers. But the long term returns support their approach.

VERDICT

Under the cosh like everyone but well placed when markets rebound.

GIZMO

Motorola MotoRokr T505

Using a mobile phone while driving is illegal and the trend around the world is to impose ever more draconian penalties for doing so. Time to get an in-car speakerphone.

One such from Motorola is now available in Australia and it has a couple of interesting features. You pair it with any Bluetooth cellphone. When someone calls, a voice (a captivating British woman on the version we’ve heard) tells you the caller’s ID information, and if you want to answer, you press a big call button on the set, which is designed to be clipped onto your car’s visor. And then you talk away. If your phone supports voice commands you can make a call without touching anything.

What’s most interesting about this set, though, is that with any phone or MP3 player that supports stereo Bluetooth you can stream music to the speaker, or to your car stereo, through an FM transmitter within the speaker. It will find the best available FM connection for you too. You can also stream calls to your stereo if you want. You charge it through the cigarette lighter and when you’ve done so it should provide up to 18 hours of talk time, according to Motorola. It’s selling in Australia for around $159.