Question 1: What are your thoughts about the very new ETF (exchange traded fund) that follows semi-conductor companies, SEMI?
Answer: I am a little wary of thematic ETFs, particularly new ones such as SEMI. Investing in semi-conductor companies is not a new idea – I guess it has received more coverage lately because of chip shortages and related supply chain issues.
SEMI tracks the performance of the Solactive Global Semiconductor 30 Index. This index contains 30 companies in developed markets, Taiwan and Korea from across the semiconductor value chain. These include: foundries, which make microchips; fabless, which are companies that design microchips; equipment makers, which create the machines used to build microchips; and integrated device manufacturers, which both make and design microchips.
To its credit, ETF Securities is making investment accessible, and with 30 stocks, you will be pretty diversified. The question you need to ask is: Is this a growth sector that you want to own part of?
Question 2: Magellan Global Fund Closed Class Units (MGF) always seem to trade at a healthy discount to its NAV (net asset value). Is there a reason for this?
Answer: There are two ways to access the Magellan Global Equities strategy – through open class units that trade on the ASX under code MGOC, or closed class units that trade under the code MGF.
MGF is now trading at a considerable discount to its NAV due to the relative underperformance of the investment portfolio. In the 12 months to 30 September, the strategy returned 7.6% compared to the benchmark index return of 27.8%, an underperformance of 20.2%.
The discount to NAV is around 12% – you can see an indicative, real-time NAV on Magellan’s website. [1]
Until performance improves, I would be surprised if the discount materially narrows.
Question 3: I mainly own healthcare and technology stocks and have none of the so-called ‘blue chip’ shares. What is the one stock in the ASX top 20 (exclude CSL which I own) that you would consider a core portfolio holding?
Answer: At the right prices, I would consider BHP, CBA and Macquarie. At current prices, probably Wesfarmers (WES).
Question 4: I read that Mount Gibson Iron Ltd (MGX) has suspended mining at their Shine iron ore mine because of the current price of iron ore. Taking that into consideration, do you think it is a buy at the current price of $0.44?
Answer: I wouldn’t, but I am not a speculator. Citi has a buy/high-risk rating, with a target of $0.60. Invest with money that you can afford to lose.
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