Roger Montgomery Fund

[Klogg]

Cheers. Just had a brief look. They all look and sound the same. Bronte Cap is closed to new Investors.
I thought going with Montgomery might be a safer bet as he has a reputation to protect, but after reading some of the comments in this thread

EGP Capital has some very interesting fees. The fund manager takes a 0.2% fee (or there abouts) to cover their fundhost costs. Then, the only fee they take is 25% of their outperformance of the benchmark (ASX200).

So if they don't beat the benchmark, you pay nothing until they recover that amount and then some.

Not to mention the fund manager has all of his wealth (other than his house) inside the fund.

 

[luutzu]

EGP Capital has some very interesting fees. The fund manager takes a 0.2% fee (or there abouts) to cover their fundhost costs. Then, the only fee they take is 25% of their outperformance of the benchmark (ASX200).

So if they don't beat the benchmark, you pay nothing until they recover that amount and then some.

Not to mention the fund manager has all of his wealth (other than his house) inside the fund.

So it's "lose I don't make a loss; win I take 25% above and beyond"?

I'd be more impressed if the fund manager charges nothing if the fund under perform.

 

[Klogg]

So it's "lose I don't make a loss; win I take 25% above and beyond"?

I'd be more impressed if the fund manager charges nothing if the fund under perform.

The fund manager has all of his wealth (other than his house), in the fund. I think that's a great incentive not to lose money...

 

[luutzu]

The fund manager has all of his wealth (other than his house), in the fund. I think that's a great incentive not to lose money...

Nobody wants to lose money. That dislike alone never stopped money from being lost.

So this fund is slightly better than the industry's norm of heads I win, tail you lose. But it's nothing exceptional. I mean the guy still get his wages and all the expenses paid no matter how he perform.

It's a smart deal we all wish we could make. But it doesn't really stand up to being recommended as awesome because he's not being paid if he under perform.

He is being paid, just no bonuses. And most idiots could easily beat the market anyway.

 

[InsvestoBoy]

And most idiots could easily beat the market anyway.

go on then...

 

[luutzu]

go on then...

Maybe I already have.

Sure it's spare change and all, but if you think that doing well on small fund is easy while doing well with larger fund is hard... you've been reading someone else's press release.

 

[InsvestoBoy]

Maybe I already have.

Sure it's spare change and all, but if you think that doing well on small fund is easy while doing well with larger fund is hard... you've been reading someone else's press release.

Oh we can just say whatever we like?

Right then yeah, even though my portfolio is all in market tracking ETFs and LICs, I have also beat the market.

 

[luutzu]

Oh we can just say whatever we like?

Right then yeah, even though my portfolio is all in market tracking ETFs and LICs, I have also beat the market.

Your portfolio is your business. Other smart money's stashing other people's cash into indices is their business.

But sure, people will just hand their cash over to some guy in a suit in a big building to play with and pay them no matter how the performance went.

Might as well head down to AMP for a few financial advise session. Or throw the money into Circular Quay.

A cursory look at the Fund Management industry show it is a joke. This kind of business model will not last too much longer.

 

[Klogg]

Nobody wants to lose money. That dislike alone never stopped money from being lost.

So this fund is slightly better than the industry's norm of heads I win, tail you lose. But it's nothing exceptional. I mean the guy still get his wages and all the expenses paid no matter how he perform.

It's a smart deal we all wish we could make. But it doesn't really stand up to being recommended as awesome because he's not being paid if he under perform.

He is being paid, just no bonuses. And most idiots could easily beat the market anyway.

But he's not being paid. The 0.2% is only for Fundhost costs.
The fund is at 50m or so, so the fee right now is 100k. Given these ARE the costs, he takes nothing.

As for "most idiots could easily beat the market anyway", that's clearly wrong.
http://www.aei.org/publication/more...ime-95-of-financial-professionals-cant-do-it/

(Look at the table, 15 year outperformance of benchmark. The % of funds that don't beat the benchmark varies, but it ranges from 83-96% that FAIL to outperform).

 

[luutzu]

But he's not being paid. The 0.2% is only for Fundhost costs.
The fund is at 50m or so, so the fee right now is 100k. Given these ARE the costs, he takes nothing.

As for "most idiots could easily beat the market anyway", that's clearly wrong.
http://www.aei.org/publication/more...ime-95-of-financial-professionals-cant-do-it/

(Look at the table, 15 year outperformance of benchmark. The % of funds that don't beat the benchmark varies, but it ranges from 83-96% that FAIL to outperform).

$100K is not nothing. He still get his cost covered. What happen when the fund under management goes to $500M or more? That's a pretty standard size nowadays isn't it?

Just because "95% of the professional" can't beat the market doesn't mean the common "idiot" can't.

An average, ordinary investor does not have the same incentive structure as a professional. That and they do not follow the idiotic concept of selling out on a crash but loading up on a rise.

Imagine you've done all the smart professional stuff. Based on all that smart analysis you buy a stock. Then suddenly it got cheaper... what should you do?

Most of the "pros" incentive is to sell and not buy. One, it look really stupid to own a down stock while others are getting bonuses by jumping on the rising ones. Looking stupid gets you fired. That and it's not so stupid when everyone else is doing it too.

For the average "investor"... if it goes down all they have to do is not tell the missus.

 

[InsvestoBoy]

That and they do not follow the idiotic concept of selling out on a crash but loading up on a rise.

All the evidence indicates that they absolutely do.

 

[Klogg]

$100K is not nothing. He still get his cost covered. What happen when the fund under management goes to $500M or more? That's a pretty standard size nowadays isn't it?

1) He's hard closing the fund at $100m
2) The $100k only covers fundhost, an actual expense. There's no wage without performance.

If you don't think this is impressive, please feel free to open a fund that pays investors when a paper loss is made.

 

[luutzu]

All the evidence indicates that they absolutely do.

Share traders don't call themselves "professional" smart money master of the universe. They just trade in and out of stock to make a buck, not pretending to be some sort of genius who ought to be pay if they do poorly, pay bonuses and extra fees when luck goes their way.

If you look at how frequent individual stock that disappoint crashes by 20% to 45%... it's getting more frequent. That's not a sign of the market knowing what it's doing.

 

[luutzu]

1) He's hard closing the fund at $100m
2) The $100k only covers fundhost, an actual expense. There's no wage without performance.

If you don't think this is impressive, please feel free to open a fund that pays investors when a paper loss is made.

Paying investor on paper losses is not the same as not having your operating costs covered when you make losses.

But aren't we arguing over what's impressive about a fund manager? Shouldn't the measure, at the end of the day, their performance on funds under management as well as their pay scale?

How's his fund going?