Investing Recommendation: Over 12 years of substantial outperformance and low relative fees means this should be a top-rated investment for US exposure. The sizeable unpaid capital gains taxes on its long-held core positions is the only reason for the discount to pre-tax NTA.
Trading Recommendation: Trade when discount is at least 2% greater than recent (1 to 6 months) average. Minimum discount advised is 3%.
Actual Performance:
MFF does not report comparative performance in its monthly reports or anywhere else I could find.
Using Excel's CAGR formula I've computed the actual MFF Inception to Date (ITD) performance using the IPO NTA after offer costs ($0.98), 28 Feb 2019 Pre-tax NTA ($2.98), Dividends (14 cents), Franking (3.47 cents) and Options at expiry ($0.975).
Actual Compound Annual Growth Rate for Pre-tax NTA: 12.52%
Actual TSR Comparison with relevant benchmark ETF:
Using Sharesight and a performance report period of 19 Dec 2006 to 28 Feb 2019 you can accurately determine like-for-like Total Shareholder Return annualised performance between investing in the MFF IPO and investing in the closest index fund to the benchmark.
- NASDAQ:ACWI has an annualised TSR of 7.77%
- NYSE:VTI (US Total Stock Market) has an annualised TSR of 7.83%
Performance Impact on NTA Discount/Premium:
MFF's 12.52% NTA CAGR is massively higher than ACWI's 7.77% (or VTI's 7.83%) for a period greater than 12 years. Meanwhile its TSR is lagging at 9.84%. I expect that, while it continues to outperform, the higher end of its discount ranges will be good buying opportunities as it will tend toward trading at a 5% discount to NAV. The discount is only occurring because of the sizeable unpaid capital gains taxes on its long-held core positions.
Management and Performance Fees:
Management Fee
1.35% per annum (inc GST)
Performance Fee
10.0% of the excess return of the units of the Fund above the higher of the Index Relative Hurdle (MSCI World Net Total Return Index (AUD)) and the Absolute Return Hurdle (the yield of 10-year Australian Government Bonds). Additionally, the Performance Fees are subject to a high water mark.
