Question 1: Why is Metrics Master Income Trust (MXT) doing an institutional placement, and will be there be a way for retail unit holders to participate?
Answer: I think the brief answer is that “it can”. It is paying a terrific yield of over 9%, trading on the ASX at NTA (net tangible asset value) and the unit price has been “rock solid”. Clearly, the Manager is incentivised to manage a bigger debt fund. The institutional placement will raise about $175 million, equivalent to just shy of 15% of the existing units on issue. The placement price of $2.00 is marginally less than the current NTA of $2.03. Retail unitholders can participate in a unit purchase plan (just like a share purchase plan). This will open on December 11 and close on January 30. The issue price will also be $2, with a maximum subscription of $30,000.
Question 2: I don’t get the monthly CPI number. How is this different to the quarterly CPI? Are they measuring the same thing?
Answer: The monthly CPI is an attempt by the Australian Bureau of Statistics to get a more timely measure of inflation into the market. It includes about 70% of the items that go into the quarterly CPI calculation. Obviously, these are items where prices are more readily measured. It has a bias to “goods” rather than “services”. The Treasury, RBA and most economists rely on the quarterly CPI as the best gauge of inflation, but for immediate trends, the monthly CPI is a reasonable indicator. In October, the monthly CPI fell to 4.9% (this is for the 12 months), from 5.6% in September. Excluding fuel, fruit and vegetables and travel, it fell from 5.5% to 5.1%.
Question 3: Peter and you have been big fans of Xero (XRO) in the past. I’d like your thoughts on where you think the share price will go from here given the aggressive sell off and no real evidence of a quick rebound.
Answer: I wrote about Xero in Monday’s Switzer Report. Here is the link: https://switzerreport.com.au/is-xero-too-expensive/
Question 4: I have an account based super pension. I have checked the percentage drawdown for my age for this year from ATO website. I was under the impression that the yearly drawdown in dollars for my age was calculated from my total portfolio and cash accounts at end of trade on 30th June. However, my accountant calculated my drawdown adding franking credits accrued during the year and not received into my account until mid-October. Is he correct?
Answer: The minimum pension drawdown is based on your super account balance as at the 30 June immediately prior to the start of the year. Normally, your account balance would include the proportionate share of any tax owed/to be refunded, accrued expenses and other accrued income. In pension mode, there will usually be no tax owing, so any franking credits will be refunded in full. Your accountant is correct to include the franking credits. As a side point, if you are in pension mode, you should lodge your SMSF Annual Return as soon as you can because the Government owes you money.
