Hi Jen
I assume by PFG you actually meant PGF (PM Capital Global Opportunities?)? Unless you actually meant Prime Financial? At any rate, comparisons can be a bit less straightforward than they seem. When dealing with listed funds, you basically have two sets of decisions to make.
First there is the decision of whether you want an active or passive strategy. Pure passive strategies (Market Beta) tend to be cheap and simple. You will get the performance of an index (minus a small management fee). At the other end of the scale are Active strategies. If you choose the right manager, they can deliver returns significantly above the market, or protect against market downturns. But they are significantly expensive more expensive, which can hinder this effort and you run the risk of picking a poor manager who actually does worse over the long run. In the middle, you have 'Smart Beta'. These are cheaper than Market Beta and still aim to track an Index. But the index is tailored differently to a simple market cap weighted index like the ASX300. This allows you to employ a different tilt to achieve an objective. All of these will cover either specific or broad themes and geographic regions as well as different assets classes (shares, fixed interest, property, commodities etc). None of these are outright better than the others, it just depends on your needs.
The second decision is the fund structure. In terms of ASX accessible investments, you can choose between LICs, ETFs and mFunds. Again, each of these have their strengths and weaknesses. LICs are good at delivering relatively consistent dividends and franking, but have the obvious potential downside of trading away from their NAV. ETFs and mFunds don't have this problem, but their delivery of income is generally highly erratic (unless specifically structured to deliver a dividend stream) and franking also tends to be less efficient. Each of these three types offer Market Beta, Smart Beta and Active strategies.
OK, that's done. Now you need to make a decision. You say you are after a long term investment. But you need a goal in order to be able to decide how to get to that goal. Do you want income or growth? Australian markets or global? What level or risk? What time horizon? Once you work these out, you can get to the individual investment selection.
CDM, YMAX and PGF(?) are all quite different. CDM is Active Australian equities LIC with a Long/Short strategy. YMAX is Smart Beta Australian equities ETF. PGF is a Active Global Equities - Long/Short LIC.
CDM's manager is pretty solid. But it is currently trading at an 18% premium to NAV. That cuts it out in my book. I do not believe in paying a premium for LICs as the risk that the market does not support that premium longer term is too high. PGF is trading at a 17% discount, so represents value. However I am not holding my breath that the market will make it revert in the near term. It also has a very capable manager. But their strategies tend to take a long time to bear fruit and the market tends to be impatient with that, hence one of the reasons for the discount. YMAX is quite niche, it's basically a version of dividend stripping. Personally I don't like it at all. It's divs might look good, but it comes at the cost of capital erosion. In total return terms, it has averaged an annual loss of almost 3% pa since inception measured against the ASX20 (its benchmark). This is the risk of Smart Beta, they can work well in some environments, not in others. At the end of the day, comparing funds is about looking at the relative strategies and structures as well as the skill of management (or index objective for passive/smart beta ETFs).
So what looks good IMO? Tough call in the ZIRP world. FGX is a good strategy at present (multi-manager/multi-strategy Aust. equities LIC) and currently trading at a 2.5% discount. FSI (active aust. equities LIC) is at a heavy discount of ~20%. They will struggle to close it, but aside from that, they have a very good manager and solid returns/divs. Any arbitrage on the SP/NTA would be a bonus but don't hold your breath. PIC is at an 8% discount, very high quality manager (active Aust equities LIC, long only).
A few to think about. Personally I hold PGF (got in at the float, been a tough ride) and WMK. If WMK got cheap again, I might buy more. But the majority of my focus is on Active managed funds at present (both mFund and direct) apart from my direct stocks.
Hope this helps!
Expand
