The price of a closed-ended fund is tied to the market value of the underlying securities. But it doesn't match NAV exactly. There is NO process to peg the price to the NAV daily.

Instead, the price is set by the market, based on supply and demand for the shares of the fund.

In a sense, a closed-ended fund is a set of securities within a security - a basket of fluctuating stocks trading inside a traded stock shell.

Munger once stated, "The big money is not in the buying and the selling but in the waiting." This sentiment, though perhaps not as widely cited as some of Buffett's lines, holds tremendous weight in the investment world for several reasons.

The Power Of Compounding: Patience Pays Off

Munger's statement highlights the magic of compounding. Time is a powerful factor in the growth of investments. As investments begin to yield returns, those returns can be reinvested, potentially leading to exponential growth over time. This concept isn't just mathematical — it requires the discipline of patience. As the saying goes, good things come to those who wait, and in the investment realm, waiting can be quite profitable.

There are 2 ways to make money and 2 ways to lose money when investing in closed end funds. You must learn them.

Using closed-ended funds

iCap closed ended fund is structured for those investors who are seeking maximum portfolio gain and who are not interested in income. The dividends and the realised capital gains in iCap are reinvested to achieve the objective of maximising capital or portfolio gain. It is not hard to see that iCap closed ended funds should be considered a long-term investment.

Should iCap be trading at a premium? It is presently trading at a discount. Well, let not the manager of the fund pleads on this, let the investors decide. The manager should stay focus on just improving the qualityof the fund's portfolio and returns.

When selecting a closed-ended fund, investors must determine the reasonthe fund is trading at a discount and whether the discount is significant enought to be attractive. A discount may be justified by:

1. uncertainty,
2. popularity or perceptions of the fund, and
3. the underlying asset base.



These are the most important factors.

Closed-ended funds: Why a discount, anyway?
Most closed-ended funds sell at a discount.

A recent sampling showed that more than 2/3rds of equity funds trade at a discount, and more than 90% of international equity funds trade at a discount. Many discounts are modest (5 to 10%), but many are 30% or more.

There is much research and speculation about why discounts happen. The debate isn't nearly as important as understanding a few of the most common reasons.

When selecting a closed-ended fund, investors must determine the reasonthe fund is trading at a discount and whether the discount is significant enought to be attractive. A discount may be justified by

uncertainty,
popularity or perceptions of the fund, and
the underlying asset base.

All 3 factors can work to cause a fund based on securities in Russia or Turkey, for example, to sell at a discount.

Likewise, during the heyday of the Asian Tigers, many funds based in Asia sold at a premium. The reason? Popularity and the perception of future growth and gains.
.
2012

Fees for managing funds have been trending downwards over the last decade. The rewards to fund manager's compares to the fund holders have been asymmetrical for many years, for most actively managed funds. This is neither healthy nor sustainable.

Asset Management Accounting 101 (A Conceptual Overview)
The single biggest metric to watch for any company in this industry is assets under management (AUM), the sum of all the money that customers have entrusted to the firm.

An asset manager derives its revenue as a percentage of assets under management, AUM is a good indication of how well -or how badly - a firm is doing.

Unlike a bank or insurer, where big losses can cause the firm to become insolvent, big losses in asset management portfolios are borne by customers.

Big losses will affect fee income by reducing AUM, but an asset manager could lose well over half the value of its assets under management and still remain in business.

In a worst-case scenario, customers could withdraw their remaining dollars and the firm could fold if its fee income became inadequate to support its operations.

But because asset management requires almost no capital investment, these companies can pare back to the bone to remain in business.



Additional notes:
Asset management firms run money for their customers and demand a small chunk of the assets as a fee in return.

This is lucrative work and requires very little capital investment.

The real assets of the firm are its investment managers, so typically compensation is the firm's main expense.

Even better, it doesn't take twice as many people to run twice as much money so economies of scale are excellent.

This means that increases in assets under management - and therefore, in advisory fees - will drop almost completely to the bottom line.

All this adds up to stellar operating margins, which are usually in the 30% to 40% range - something you won't see in many industries.

Closed-End Investment Fund Discounts

Several studies have shown that closed-end funds tend to trade at a discount (sometimes exceeding 50%) to their per share NAVs.

Theoretically, investors could purchase all the shares in the fund, liquidate the fund, and make a profit by selling the constituent securities at their market prices.

However, after accounting for management fees, unrealized capital gain taxes, liquidity and transactions costs, any profit potential is eliminated.

How to profit from this investor sentiment variability?

The strategy of buying the closed-end funds with the biggest discounts earned superior returns (a strategy also advocated by Benjamin Graham). Burton Malkiel, author of A Random Walk Down Wall Street, has also advocated such a strategy.

Focus on the fund manager's ability to deliver high returns on NAV. The other issues are side shows and add to complexities and costs; these are better avoided preferably.

A company delivering CONSISTENT AND GROWING DIVIDENDS can only do so when it's EARNINGS ARE CONSISTENT AND GROWING.

I often use dividends and particularly dividend yields , in some companies, as a method to know the lowest prices that that these yields can support. The DY range of a consistently dividend company as be used as a rough guide as to whether its price is relatively cheap or expensive.

ICap shareholders are approaching a critical milestone. They will soon have to decide on the future of this fund.

Focus on the fund manager's ability to deliver high returns on NAV. The other issues are side shows and add to complexities and costs.

TTB is now close to 70.

The fund manager should focus on growing the NAV.

The price will take care of itself. Too many factors determine the price. It is better to let these remain as before.

Imagine what can happen to iCap price if it can grow its NAV consistently and averagely at 15% per year for many years.


At one time, in the early years of iCap, its price was at a premium to its NAV. It is irrational for a careful investor to buy a closed end fund at a premium. It presumed that its NAV could rise faster and exceed the price paid sometime in the future. This was speculating and not investing. More likely, the premium price drops even as the NAV continues to rise. Worse still is the scenario where the premium price paid drops below the usual price discount to a shrinking NAV.

The full value of a closed end fund is KNOWN. The rational buyer will always demand a discount. Expect a discount of 20% as the normal.

This discount can be expected to remain until the fund is liquidated for cash or converted to open ended mutual fund.

Investing should be simple and not simpler!

Chasing Yield + Paying a Premium
= Better Hope there is Someone more Irrational.

Learning from the mistakes of calvintaneng

Your homework checklist:
1. Know how this company makes money
2. Be able to articulate a thesis for owning the stock
3. Understand how the stock price could increase or decrease
4. Start off as a skeptic of any stock
5. Don't buy into the hype machine

Learning from the mistakes of calvintaneng

Your homework checklist:
1. Know how this company makes money
2. Be able to articulate a thesis for owning the stock
3. Understand how the stock price could increase or decrease
4. Start off as a skeptic of any stock
5. Don't buy into the hype machine

>>>
FastMoney666

Not all index funds are created equal.....only US market S&P 500 is probably is an exception. KLCI e.g. depending on your entry timing, buying at the wrong timing is probably going nowhere. So is Singapore, STI and needless to say Hong Kong HSI or HSCEI and etc......Only when a stock market crashed like 40-50%, going for a big swing with index funds will be OK....😎
>>>

Very true. You will need to invest into the S&P 500 Index fund run by Vanguard.

Investing is simple. Just stay with the facts. No need to promote so muxh.

Johnchew5 Thanks for educating con calvintaneng. Hope he can stop his repeated lying.

>>>
>>>
calvintaneng

Bounce ideas?

My ideas for Netx on its Real Business in Exinda Equipment for Data. I have always believed in it. Management might be another matter. Even so after all your harping Netx is still at 12.5 sen (not 2 sen like Serba )
Netx still got cash and real assets worth Rm90 millions and not insolvent yet like knm

>>>

Warren Buffett, the investment guru, has said the best way for most investors to own common stocks is through an index fund that charges minimal fees, saying they will "beat the net results delivered by the great majority of investment professionals".

>>>
goldmanbull

Also does anyone know if taking 15% above annual 5% performance and cummulative yearly 5% performance is reasonable? Sorry, im not an expert here and would like to learn from you guys. Is this fees reasonable comparing to others in the market? thanks
>>>


Avoid such funds.

>>>
From 2017 to 2023
KLSE index decreased by -(1750 -1426) / 1750 = -324 / 1750 = - 0.185 ( or - 18.5%)
iCAP NAV increased 3.57 / 3.56 = 1.0028 ( or 0.28%)
>>>

From 2017 to 2023 (about 6 years), the returns for those who kept their money in FD were better than the returns from the KLSE or iCAP. The FDs had returned 3% to 4% yearly for the last 6 years.

Of course, this is asset allocation hindsight bias (vision 2020).

iCAP

FYE --- NAV --- Dividends --- Annual Return on NAV)
2005 --- 0.99 --- 0 --- -
2006 --- 1.37 --- 0 --- 38.4%
2007 --- 2.23 --- 0 --- 62.8%
2008 --- 1.56 --- 0 --- -30.0%
2009 --- 1.99 --- 0 --- 27.6%
2010 --- 2.55 --- 0 --- 28.1%
2011 --- 2.73 --- 0 --- 7.1%
2012 --- 2.93 --- 0 --- 7.3%
2013 --- 3.00 --- 0.095 --- 5.6%
2014 --- 2.91 --- 0 --- -3.0%
2015 --- 3.01 --- 0 --- 3.4%
2016 --- 3.12 --- 0 --- 3.7%
2017 --- 3.56 --- 0 --- 14.1%
2018 --- 3.18 --- 0 --- -10.7%
2019 --- 3.12 --- 0 --- -1.9%
2020 --- 3.10 --- 0 --- -0.6%
2021 --- 3.46 --- 0 --- 11.6%
2022 --- 3.27 --- 0.20 --- 0.3%
29/9/2023 --- 3.57 --- 0 --- 9.2%

>>>>

KLSE index
2005 900
2017 1750
2018 (Jan) 1868 (Peaked)
2023 1426

From 2005 to 2017
KLSE index increased 1750 / 900 = 1.9x
iCAP NAV increased 3.56 / 0.99 = 3.6x

From 2017 to 2023
KLSE index decreased by -(1750 -1426) / 1750 = -324 / 1750 = - 0.185 ( or - 18.5%)
iCAP NAV increased 3.57 / 3.56 = 1.0028 ( or 0.28%)

KLSE index
2005 900
2023 1426

1426/900 = 1.6x (excluding dividends)

iCAP NAV
2005 0.99
2023 (27.9.2023) 3.57 .. excluding dividends

3.57 / 0.99 = 3.6x

Market Price of iCAP
2023 Today's price 2.65

2.65 / 0.99 = 2.7x

S&P 500
2005 1,200
2023 Today 4,288

4,288/1,200 = 3.6x

Berkshire Hathaway A share
2005 Highest price 87,000
2023 Today's price 531,477

531/87 = 6.1x

Berk shire’s Performance vs. the S&P 500
Annual Percentage Change
Year...in Per-Share Market Value of Berk shire ...in S&P 500 with Dividends Included

2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.8 ...4.9
2006 ......................................................................... 24.1 ... 15.8
2007 ......................................................................... 28.7 ... 5.5
2008 ......................................................................... (31.8) ... (37.0)
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7... 26.5
2010 ......................................................................... 21.4 ... 15.1
2011 ......................................................................... (4.7) ... 2.1
2012 ......................................................................... 16.8 ... 16.0
2013 ......................................................................... 32.7 ... 32.4
2014 ......................................................................... 27.0 ... 13.7
2015 ......................................................................... (12.5) ... 1.4
2016 ......................................................................... 23.4 ... 12.0
2017 ......................................................................... 21.9 ... 21.8
2018 . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8... (4.4)
2019 ......................................................................... 11.0 ...31.5
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4 ....18.4
2021 ......................................................................... 29.6 ... 28.7
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.0 ... (18.1)

For 9 yeas from 2005 to 2013, iCAP's returns on NAV were impressive, growing its NAV from RM 0.99 in 2005 to RM 3.095 in 2013.

For the next 9 years, from 2013 to 2022, it grew its NAV from RM 3.00 in 2013 to RM 3.57 + 0.20 dividends (in 2022) in Sept 2023. During this lack-lustre return period, its share prices were traded at a steep discount, at times approaching 40% to its NAV.

iCAP

FYE --- NAV --- Dividends --- Annual Return on NAV)
2005 --- 0.99 --- 0 --- -
2006 --- 1.37 --- 0 --- 38.4%
2007 --- 2.23 --- 0 --- 62.8%
2008 --- 1.56 --- 0 --- -30.0%
2009 --- 1.99 --- 0 --- 27.6%
2010 --- 2.55 --- 0 --- 28.1%
2011 --- 2.73 --- 0 --- 7.1%
2012 --- 2.93 --- 0 --- 7.3%
2013 --- 3.00 --- 0.095 --- 5.6%
2014 --- 2.91 --- 0 --- -3.0%
2015 --- 3.01 --- 0 --- 3.4%
2016 --- 3.12 --- 0 --- 3.7%
2017 --- 3.56 --- 0 --- 14.1%
2018 --- 3.18 --- 0 --- -10.7%
2019 --- 3.12 --- 0 --- -1.9%
2020 --- 3.10 --- 0 --- -0.6%
2021 --- 3.46 --- 0 --- 11.6%
2022 --- 3.27 --- 0.20 --- 0.3%
29/9/2023 --- 3.57 --- 0 --- 9.2%

htt p:/ /myinvestingnotes.blogspot.com/2023/09/netx.html
The business of Netx from 2014 to 2023 (graphic)

DJThong

He has an army of brainless zombies who report posts but up above he knows what lies someone has told
And the losses they faced which ge brushes off now
But his following is almost nothing now
His groups pitiful and quiet
He croaks but no one responds
SGX listing is almost zero impact
So he must regroup and think of the next big tale to spin

1 hour ago


Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

>>>
calvintaneng

Bounce ideas?

My ideas for Netx on its Real Business in Exinda Equipment for Data. I have always believed in it. Management might be another matter. Even so after all your harping Netx is still at 12.5 sen (not 2 sen like Serba )
Netx still got cash and real assets worth Rm90 millions and not insolvent yet like knm

>>>

NETX
Price 0.145 (29/9/2023)
Market Capital (RM) : 133.34m :
Number of Share : 919.56m

10 minutes ago



Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

Is calvintaneg a smart or a very too smart guy? I think he is beyond redemption.



8 minutes ago



Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

NETX ( RM ,000)
Ann. Date … Revenue … PBT
31-Jan-23 … 13,638 … -16,558
31-Jan-22 … 81,099 … -22,563
29-Jan-21 … 14,897 … -16,919
31-Jan-20 … 9,993 … -29,722
30-Aug-19 … 9,702 … -19,086
29-Aug-18 … 17,567 … -11,323
30-Aug-17 … 19,362 … 1,488
30-Aug-16 … 9,779 … -6,708
27-Aug-15 … 3,581 … -11,077
Total (9 yrs) … 179,618 … -132,468


From 2015 to 2023 (9 years), NETX generated cumulative total revenues of RM 179.6 m.
It made a profit before tax of RM 1.488 m in 2017 only and losses in all the other years.
The cumulative total losses for the 9 years amounted to RM 132.5 m.

How is NETX able to survive all these years? Ask calvintaneng, as he is well versed in the business of NETX. :-)

NETX ( RM ,000)
Ann. Date … Revenue … PBT
31-Jan-23 … 13,638 … -16,558
31-Jan-22 … 81,099 … -22,563
29-Jan-21 … 14,897 … -16,919
31-Jan-20 … 9,993 … -29,722
30-Aug-19 … 9,702 … -19,086
29-Aug-18 … 17,567 … -11,323
30-Aug-17 … 19,362 … 1,488
30-Aug-16 … 9,779 … -6,708
27-Aug-15 … 3,581 … -11,077
Total (9 yrs) … 179,618 … -132,468


From 2015 to 2023 (9 years), NETX generated cumulative total revenues of RM 179.6 m.
It made a profit before tax of RM 1.488 m in 2017 only and losses in all the other years.
The cumulative total losses for the 9 years amounted to RM 132.5 m.

How is NETX able to survive all these years? Ask calvintaneng, as he is well versed in the business of NETX. :-)

Is calvintaneg a smart or a very too smart guy? I think he is beyond redemption.

>>>
calvintaneng

Bounce ideas?

My ideas for Netx on its Real Business in Exinda Equipment for Data. I have always believed in it. Management might be another matter. Even so after all your harping Netx is still at 12.5 sen (not 2 sen like Serba )
Netx still got cash and real assets worth Rm90 millions and not insolvent yet like knm

>>>

NETX
Price 0.145 (29/9/2023)
Market Capital (RM) : 133.34m :
Number of Share : 919.56m

>>>>
Posted by DJThong > 32 minutes ago | Report Abuse

He has an army of brainless zombies who report posts but up above he knows what lies someone has told
And the losses they faced which ge brushes off now
But his following is almost nothing now
His groups pitiful and quiet
He croaks but no one responds
SGX listing is almost zero impact
So he must regroup and think of the next big tale to spin
>>>>

Interesting post by Thong. Thanks for sharing.

Is COL a friend or a foe or a threat to shareholders of iCAP? Definitely not a foe. So far not a threat. It is good to have knowledgeable investors in the fund too. Of course, to some, they are perceived as a threat due to its large shareholdings.

Educate the shareholders on the reason. The court is not going to solve this perceived threat, should it exists.

Surely, in your portfolio of stocks, you have companies that gave regular dividends and its share price continues to grow, over many years.

Search them out yourself, and just stay invested.

Maybank gives dividends equivalent to a yield of 6% - 7%, with little capital gains.
PBB gives dividends (DY is lower than Maybank), with slow growth in its share price over the long term.

>>>
Posted by DJThong > 35 minutes ago | Report Abuse

More excuses from the pitiful excuse of a man
Won’t admit he led his followers to losses.
Changing the story because as an old man he fears judgment day.
God knows what you did . There is no twisting before the Almighty. No excuses accepted. No silly followers to help defend the indefensible.

>>>

We know. Many knows too.
Thanks for sharing.
Sorry somone chose to flag and delete some of your posts.

For iCAP IVF fund, can we draw the conclusion that this fund was not able to grow at a high rate of return exceeding the dividend returns sought by its initial investors. Thus, its NAV has dropped below its inception NAV.

If iCAP has the ability to achive return on NAV greater than the return that you require, then it makes sense for it to retain all its earnings to be reinvested at this higher rate of return on NAV.

On the other hand, should it not be able to deliver higher return on NAV than you are expecting or that you are able to do on your own , you should sell out and move your money into another stock.

It all boils down to the performance of the fund.

The difficulty facing the shareholders of iCap when they need to sell is the very steep discount to the NAV. This discount reflects the popularity or unpopularity of investing into this fund, a complex topic of many factors.

Capital Dynamic has been busy growing its assets under management. Its focus has obviously been diluted unlike when it was managing iCAP in Bursa as the sole fund. Most asset managers obtain their biggest income from growing their assets under management. Buffett is unique is his ability to GROW his single "fund" at GOOD AND HIGH rates of returns CONSISTENTLY over ALMOST EVERY YEAR.


iCAP IVF

This is a fund that distributes dividends managed by Capital Dynamic.

For those who wish to see what might happen to the NAV of iCAP if regular dividends were to be adopted, ask at the AGM for Capital Dynamic's performance of its iCAP IVF (International Value Fund). The fund started at a unit value of Australian $1 in ?2009 and it is today at unit value of Australian $0.6655. For those who have invested Australian $20,000, the value of their investment that they stay invested (minus the dividends) today in iCAP IVF is Australian $13,310.

The fund has been profitable. However, its rate of returns a bit anaemic. The investors have not lost money but has made small profits.

For those who invested into this fund since its inception, the fund has grown their initial Australian $20,000 investment to a total final value of $24,200 over 14 years. Those choosing to receive regular dividends would have received dividends totalled $24,200 - $13,310 = $10,890 [$4,200 (gain from the value of their investment) + $6,690 (from return of their own money invested).]

Are you a long term investor with a long term time horizon and who will be a net investor into the stock market in the future years? You will love to buy your stocks cheap.

>>>
Posted by FastMoney666 > 3 hours ago | Report Abuse

iCapital.biz finally announced the Innovative Dividend Policy 🤣🤣
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3388655
>>>

This adds another layer of complicity to managing the fund.
I think it is solely to reduce the share price discount to the NAV; may not work out as planned.

Better for the fund to focus on delivering high return on NAV (high ROE). Those wishing to have some income can always choose to sell some of the shares (abeit at a discount).

PE of 2+. Why?
Always study the FCF, the cash that truly belongs to the owners (shareholders).

http:/ / myinvestingnotes.blogspot.com/2023/09/insas.html
INSAS

What happened to its retained earnings?
Has it grown its earnings?
Has its share price reflects its increased NTA due to the retained earnings?

https:/ / myinvestingnotes.blogspot.com/2023/09/insas_28.html
INSAS

htt p:/ /myinvestingnotes.blogspot.com/2023/09/netx.html
The business of Netx from 2014 to 2023.

https://sgx.i3investor.com/web/forum/forum-list
So many posts in i3 Singapore and yet so quiet there!!!