Question: Charlie talked about investing in the BATS last week. What’s the best way to do this? I am running my own SMSF.
Answer (By Paul Rickard): You can buy individual shares in the BATS companies [Baidu (NASDAQ: BIDU), Alibaba (NYSE: BABA), Tencent (HKG: 0700) and Samsung (KRX: 005930)]. CommSec and nabtrade offer international share trading facilities.
There is no readily available “managed” option.
If this were your first offshore investment, I would approach this with a degree of caution.
Question: I read with interest your recent article with reference to the ALP proposals on CGT, franking credits and negative gearing and suggested solutions or effects. I was particularly interested in the effect of the franking credit changes on people in pension mode who have an SMSF, and who stand to lose the franking credits. I am in this situation. You mentioned selling out of LICs like WAM.
How is the Switzer Dividend Growth Fund (SWTZ) affected by this? And how do you intend to tackle this in your fund?
Also, do you expect the ALP to further water down their franking proposal?
Answer (By Paul Rickard): Quoted managed funds, such as SWTZ, shouldn’t be impacted to anywhere near the same extent. Firstly, they trade around NTA (so there is no incentive for a seller to exit) and more importantly, they are open-ended funds. This means that the number of units on issue can increase or decrease according to investor demand. If there’s a lot of sellers, the market maker buys back the stock around NTA and the units are redeemed.
With a listed investment company, the number of shares is fixed – and, where the shares trade on the ASX, they can often have no direct link to their real value. If there are no or few buyers, the ASX-traded price can drop to a considerable discount.
Yes, I do expect the ALP to soften the policy in government. More so because I don’t think they will get it through the Senate without some crossbench support.
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