Smart Investor: Up to speed – October 2008

Smart Investor magazine, Up To Speed column, October 2008

GIZMO

Last time your correspondent bought a laptop, guess what his number one criterion was? Graphics? Nope. Processor speed? Nah. It was battery life. Because there’s just no point having a whizz-bang laptop for your business trips to Hong Kong or London if its battery fizzles out before you’re over Alice Springs.

I ended up with a Sony Vaio – and it’s pretty good – but couldn’t help but notice the ads for the new Dell Latitude E6400, which advertises a 19-hour battery life.

Getting this result, Dell says, requires you to use a system configured with a solid state drive and a 12-cell slice battery – that is, something you attach to the main battery, rather than the default system itself. Reviewers dealing with the basic system come out with a rather more prosaic five or six hours – still pretty good by laptop standards, but not quite so dramatic as the 19-hour boast. Still, those who really want a laptop to last a flight to Europe won’t mind shelling out for the additional paraphernalia.

Not much is sacrificed for this battery life – there’s a good 14.1 inch display, a 2.2-GHz Intel Core 2 Duo P8400 processor and 2GB of RAM (fine for Windows Vista), and a 160GB hard drive. One gripe is that the graphics (Intel’s GMA 4500MHD integrated GPU with 32MB of memory) are weaker and slower than the norm.

NEW PRODUCT

Advance Tradewinds Global Equities

What is it?

It’s an international equity fund that gives you access to a fund manager called Tradewinds.

Who’s that?

Tradewinds is based in Los Angeles, with US$30.8 billion under management. Its chief investment officer is called David Iben and has been active in global equities management for the best part of three decades.

What’s the style?
It will invest in between 40 and 70 large cap world shares, mainly from the developed markets but with up to 25% in emerging markets. It takes a value style of investing, which means looking for undervalued stocks with the potential to increase in price, and with particular attention to franchise quality and the competitive position within their industry.

What does it hold?

At launch its biggest stockholdings were heavy on resources, including Anglogold Ashanti; Barrick, a gold miner from Canada; and Shell. Another large holding is Sprint Nextel, the US wireless telco. It is not tied to any one index or allocation.

What does it charge?

1.1% annual fee, with no performance fee. There is a 0.35% buy/sell spread. If you buy it through a platform the administrator will charge a fee too.

What do the rating agencies say?

Standard & Poor’s rates it 4 stars, “Reflecting our high conviction that the manager will consistently generate risk-adjusted returns in excess of both its relevant investment objectives and its peers”. Morningstar in the US said it was “unlikely to ever get lost in the foreign large value crowd” but did say that “its issue, sector and market concentration will cause problems from time to time.”

ROADTEST

Intech Secure Trust

Ideal for battening down the hatches

Performance

According to Morningstar, it’s up 5.83% in the 12 months to August 31, and 3.69% in the last six months. For an investment product that’s quite a result in a market where stock market funds are down as much as 30%. However, don’t expect it to be any more lively in a bull market: its five year numbers are very similar, at 5.42%.

Holdings

It has achieved this performance by an ultra-cautious allocation. At June 30 81.4% of the fund was in cash, 7% in Australian bonds and 6% in international bonds. Aussie shares count for just 1% of the portfolio, as do alternative investments, with international shares and international property securities accounting for 1.8% apiece.

Experience

Intech uses a multimanager approach, blending together a host of other underlying managers to try to get the best results for the risk profile. In practice, at the moment, this is pretty much an investment in Vanguard, which runs both the cash and the Australian bonds allocations, as well as stakes in the international bonds and shares. And in terms of experience, for those cash and index approaches, you don’t get much better than Vanguard. There are 27 separate mandates but only one other manager gets more than 2% of the total: Aberdeen, on the international bonds side.