Eadwig
26 Feb 2016
Re: Growth Can't Be Trusted "This does not feel bad thing to me. I guess that also impacts the bonus of fund manager?"I dunno what the bonus scheme is for FCSS (as I said). Woodford certainly hasn't qualified for a bonus in WPCT this year and looks extremely unlikely to do so next year - but then that is a newly floated 'patient fund' so perhaps unsurprising. (see that board for some excellent up-to-date analysis, including his bonus structure).FCSS is not newly floated and you would have expected it to hit its straps before now. Consumer-led growth in China remains in double-digits, but they haven't managed to match that. Perhaps it really isn'ty possible via stocks, plus the state of the volatile 'market' over there is hardly beneficial to such a fund either, resulting in recent false highs and now (probably) false lows, in my opinion.I always believed, and said so here, that they should have used their ability to buy non-Chinese companies that had/have a large presence in China. It would have certainly smoothed out some of the risk and the early traps that Bolton walked into from a failure to understand the looser regulatory environment in HK, which he openly admitted to, if he had bought 'Chinese' stocks listed on the NYSE, for example.Mind you, difficult to avoid traps that you aren't aware are there at all. I didn't know either (but then it aint my business to know), my belief in such a strategy was based on some obviously high performing US stocks benefitting from Chinese markets that it seemed to me FCSS were missing out on.As for Woodford stating he would buyback in such a situation, we don't know, do we? As for issuing more shares, he already did that and still has invested all the cash available. That, to me, in a 'patient' fund, suggests an unseemly haste to get all the money in play, which was, after all, more than four times what he expected to raise in the first place. Now he says there are many more opportunities hot yet exploited.The fund is well underwater, suggesting he spent too early, and he wants to issue more equity. I took a 16.5% profit from the fund a few days before he announced the first issue of extra equity, so pretty much maximised the premium in my favour (as it happened). The fund is now 10% down and he is planning on selling all his majors (as in FTSE 100 high divi payers) at a loss, to raise miore cash for the funds. A bit desperate? He might have got lucky, the FTSE has certainly moved in the right direction for him since he announced that.But, it is another strategy change just a year in. I don't think it bodes well, frankly. Or maybe I am missing the genius. I just can't help wondering if the clever finance juggling is going to pay the shareholders eventually. I did have every intention of buying back in when the NAV and sp were more in line, but I'm less inclined now.What is 'significant' premium for a fund enough to justify a buyback? That's the big question. If you are buying back shares for valid reasons, as I said in my post, then it is surely because you don't believe you can use that cash to out-perform the gap between NAV and fund price. That is a pretty poor state of affairs for any fund that is aimed at a high growth sector, whichever way you look at it.I take it you're invested, nk? You don't usually post an opinion, just very helpful analyst comments. I find them very helpful anyway, and have had you on my favourites list as long as I can remember. If my comments about FCSS have upset you at all, remember that a) I was invested myself for years and by far the most active poster on this board trying to get a grip on why the fund wasn't performing and b) sometimes comments that upset us are a sign that the poster is speculating about something we're already not too comfortable with ourselves. Ie. don't shoot the messenger!So, I must repeat, I have no idea what the FCSS bonus policy is and in no way accuse them of lining their own pockets at the expense of shareholder
nk1999
26 Feb 2016
Re: Growth Can't Be Trusted Eadwig,As you know, if the market price of Investment Trust is significantly below the NAV then buying shares at market price increases the NAV per share for remaining shares. Even Neil W has said a couple of days ago that he would do buy-back in WPCT if and when the shares are quoted significantly lower than NAV. Equally he planned to issue more shares when WPCT was quoting at a premium. And FCSS did the same in its early days.This does not feel bad thing to me. I guess that also impacts the bonus of fund manager?nk
Eadwig
26 Feb 2016
Re: Growth Can't Be Trusted "Not sure I agree with gearing the fund up if Dale is negative on growth and as he says will drag equities lower "I they still buying back their own shares? That was more or less the final straw for me with FCSS. What is the point of raising money for a fund to invest in a certain part of the world and then buy your own shares? It seems pointless, doesn't it, yet there are at least two points I can think of that drive share buybacks.1) Buy the shares and cancel them. This will have the effect of increasing the earnings per share figure in the yearly accounts. In The City and on Wall Street, many bonus payments are made on the EPS figure, no matter how it was achieved. I do not know if that is the case with FCSS.2) In the US especially, where the buyback became very fashionable in recent years, the argument goes "money is so cheap, we can afford to borrow it to buy our own shares and boost the share price to give us a reasonable rate of return on that borrowing".In my opinion, share buybacks are only a good thing when a company truly believes the market is undervaluing its own shares - by a long way. For a fund to re-buy its own shares, especially if it then goes out to borrow more money, they are surely saying, effectively, "this is the best use of cash for our shareholders because we don't think we can beat the deal through any investments that we can come up with". And that in a market that is growing at 6% plus, and faster during the fund's lifetime.They may be right, the thesis of the fund investing in consumer-led Chinese stocks has always been very sound, I thought. Unfortunately, the results have never reflected that. probably because a lot of investors around the world have still been pouring money into miners in the hope that the infrastructure building in China is about to take off again, despite what the Chinese leadership has been telling us year after year.Meanwhile, consumer-led stocks tend to get overlooked so don't end up with the over-inflated prices that many commodity producers reflected up until a year or two ago.But, like I said, once FCSS started buying back shares, and whatsmore doing it badly, that was when I decided it was time to get out and stay out. I'm afraid FCSS was a big disappointment for me overall.Good luck to those still holding, I hope they come good for you.
IOMINVESTCOM
19 Feb 2016
Growth Can't Be Trusted [link] sure I agree with gearing the fund up if Dale is negative on growth and as he says will drag equities lower
IOMINVESTCOM
17 Feb 2016
Fidelity China gears up for recovery, tackles discount [link]
IOMINVESTCOM
11 Feb 2016
Re: Should I plunge in again? Hi LG, WOW, your thinking we will get down to the lows of 2012 & late 2011 which wipes all grow out!! over that time. On another note are you as bearish on India which I follow epic NII if you want to post a reply on that bb it would be appreciated.ATB
lambrini girl
11 Feb 2016
Re: Should I plunge in again? hi..IOMie...I pencilled in 70 for late summer ...(perhaps next year)
IOMINVESTCOM
10 Feb 2016
Re: Should I plunge in again? Morning LG,Will be interesting to see if the recent 1.05 holds which I doubt in any push lower. I was looking at 94.5 area as interesting with 86 & 80 other points that stand out if interested to drip feed.I hope your right!
lambrini girl
07 Feb 2016
Re: Should I plunge in again? wait for the sell off in FEBruary..<<< £1 would be ideal starting price...
nk1999
24 Nov 2015
From Citywire Shareholders in Fidelity China Special Situations (FCSS) are set to pay a performance fee of over £2.7 million despite losing 16% of their money in the latest half-year period.Interim results published by the investment trust last week show a provision of £2,738,000 has been made to pay its fund manager, Fidelity, for the six months to 30 September, lifting overall ongoing charges for the period to 1.7%. Although this is down from just over 2% a year ago when Fidelity also earned a performance fee, it marks the first time in the trust’s five-year history that the fund manager will receive the extra fee when investors have suffered losses......"[link]
Eadwig
21 Nov 2015
Re: Eadwig - Junior ISA holland44, "as with pensions to age 55"Hah! Look again, matey. Already pushed out to 57, 58 if you are under 40. Then it is going to be linked to just 10 years below the national retirement age, which is expected to rise again from 68 to 70 sooner rather than later.I *signed* my private pension contract so that I could take it at 50 (I wanted 40, but 50 was the earliest) and that was what was agreed between myself and my private pension company. The government pushed out the age at which I can collect to 55 - after I had retired at 40. No one asked me if it was ok, no one needed an amended contract, but I certainly needed to adjust my financial planning.Oh, and now they are discussing taking back any tax allowance previously given, the argument being that they are going to take it when you cash your pension anyway. If they do that, by what moral authority do HMG continue to name the age at which I can take my private pension money?Just one more reason why I tend towards steering my daughter's money clear of any government schemes - especially longer-term ones.
Eadwig
20 Nov 2015
Re: Alibaba vic1981, :"1. The trust offers exposure to China equities that are not available to western investors. Not so for Alibaba since the US listing. "FCSS reserves the right to invest in any company that is heavily involved in China, no matter where it is listed, from memory, up to a possible 20% of fund value I think it was. An option I think it has used very poorly over its lifetime, by the way. Bolton wouldn't have been caught out so badly by Hong Kong accounting standards at the start if he had taken on a few US companies selling heavily to the Chinese market.Hong Kong listed equities, by far the biggest component of FCSS, are available to western investors.The 200 or so companies that make up the Alibaba group had 367 million active customers within China alone in the 12 months to Sept 30th 2015. That is far more than the whole population of the USA, by the way. Delivering mobile phone services, internet infrastructure and platforms for online retailers isn't 'traditional consumer services', I suppose, but why would you limit yourself to that?
Eadwig
20 Nov 2015
Re: Eadwig - Junior ISA holland44,I certainly see your point of view, although as a non tax payer some of it does nor apply to me.Also, I did invest in a mid cap european fund in the past that actually stopped trading after heavy initial losses.. I forget which one it was, but an extremely reputable firm, Shroders or Blackrock I think. I did get about 50% or perhaps more of my money back eventually from the liquidators in three sums over several years. I think the final payment might have been as much as seven years after it stopped trading.I invested in the Shroder Asia Pacific fund, which didn't actually move into profit until after 10 years. And those years were some of the best of Chinese growth, which was what I was after. I remember putting 6 grand in a PEP in the 90s which doubled and then went back to £6k before doubling again. What happens if she hits 18 at the bottom of a market cycle? I too would be feeding such a fund in anticipation of British Uni fees.I don't need to go into FCSS which I was also in more or less from the beginning, do I? The point is, funds are no guarantee of safety either. There is an Aviva one that is a max of 40% stocks, the rest bonds and a little bit of Fx. which I did consider (from them or a similar fund with another provider) for a JISA.I looked at Nationwide (I have one of my own current accounts and savings accounts and ISA there) but there was nothing suitable for my daughter. I didn't fully explain the circumstances, but, although a 'British citizen by birth' (Ie. I, a British subject, am her father), she was not born in Britain nor does she live there. It causes a lot of problems, including with Premium Bonds, another option I looked at.But, as you say, what is the point of a 'savings' account that barely keeps up with inflation even at current levels? I can get 3 or 4% in an account in the country where she lives, but the exchange rate has shifted 20% toward the GBP since she was born. So hardly stable either.Anyway, thanks for your views and I hope the JISA works out soundly for your daughter.
holland44
20 Nov 2015
Re: Eadwig - Junior ISA Eadwig and le vin est par - I'm afraid I disagree. I think JISAs are a great idea. Dividends on any capital over £100 that you or your partner give your child will be taxable as if the income were your own, once you or your partner are a taxpayer. Why pay extra income tax when the dividends and capital growth can be protected inside a JISA? Gifts from grandparents or other people are not affected by this rule.Also, the fact the money is locked up until age 18 is a positive advantage in my view: as with pensions to age 55, it can't be raided for short-term purposes that may later be regretted, and will be left to grow compounded and tax-free for a long time. How many adults, with all the day-to-day pressures on their finances, have the luxury of investing for 18 years to build up a lump sum?I think the issue of diversification is a red herring too: why leave long-term cash in a savings account rather than in an investment trust, just because you believe you can't achieve the chimera of a "balanced portfolio"? Future-proofing too is impossible: no one knows the future, but just investing in a single UK mid-cap investment trust for 18 years will be a huge improvement on cash in a building society account. There are also plenty of cheap trackers out there from the likes of Vanguard which attempt to replicate the UK indices, European ones, the S&P500, or indeed the whole world if you wish. Your child's capital will then suffer (and benefit from) all the vagaries of stock market gyrations, changes in currency rates, and the rise and decline of different regions just like everyone else's, but over the long-term her money will almost certainly do far better being invested in productive equity assets rather than sitting "safe" but largely dead in a savings account, barely tracking inflation.My daughter is 7 months old: we've invested two large gifts from her grandparents in the JPMorgan JISA, due to its low costs, and will do the same next year. The lump sum has a decent chance of growing over the next 17-18 years to be enough to pay for her university tuition fees. It will a lovely 18th birthday present, and a very practical way for her grandparents, who will probably have passed away by then, to leave a remembrance of themselves. We're also putting smaller gifts from friends into a simple savings account with the Nationwide: 3% interest tax-free. Yes, dead money, but still a useful piggy bank for our daughter to raid for small expenditures as she grows older.
vic1981
20 Nov 2015
Re: Alibaba I would assume the following1. The trust offers exposure to China equities that are not available to western investors. Not so for Alibaba since the US listing. 2. Alibaba is heavily dependent on trade / exports so not part of traditional consumer services sector that continues to grow at the moment.
