Another Letter from the US IRS

I got a another letter from the US IRS. The good news is that they accept the tax return that I prepared and my payment of $30.10 in taxes for 2008. The bad news is that now want me to pay penalties and interest. A penalty of $30.10 for filing late, a penalty of $2.86 for paying taxes late, and interest of $4.01. So I'll send them a cheque for $36.97 and hopefully that will be the end of the saga.

Draft Outbound Foreign Investment Rules Released

The Australian government has finally released the draft of legislation intended to replace the FIF rules. From my reading of the information provided, only funds that invest in debt and do not distribute 80% or more of profits would be included in the new rules. More interpretation is available here.

Based on this, the kind of investments that I'm interested in should not be captured by the new rules and I will be able to invest overseas without worrying about complicated tax rules.

EAIT Terminated

Everest Financial is winding up. I should get a payout of $A800 next month as part of the run-down. Now I got a letter from One Managed Investments who took over the EAIT fund from Everest that they terminated the fund on 11 February and are now managing just to pay out the investors. We should get a return of capital of 88.2 cents per share (i.e. about $A7,500 for me) on 1 March and the rest over the next four years. The delay is because the underlying hedge funds have "lock-up" periods.

The question is whether I should look to reinvest my capital in other hedge fund opportunities. If all goes to plan I did actually make some money on the EAIT fund (about $A3,000). I lost a lot investing in Everest Financial, the management company. Logically, the latter shouldn't deter me from investing in hedge funds. But the drawn out saga of EAIT has certainly made me more wary.

HFRX Performance for January 2011

Overall hedge funds gained 0.56% in January according to the HFRX index. In comparison MSCI World Index gained 1.59%. Equity hedge and market neutral strategies and systematic diversified strategies had negative returns. The Man-AHL managed futures fund lost 3.74% in January so the latter is not surprising.

Moominvalley January 2011 Report

As usual everything is in USD. The AUD fell a little from 102 US cents to 98. This hit our returns in USD terms. World stock markets gained a little with the MSCI World Index gaining 1.59% for the month. Here is the summary account for December:



Non-investment income and retirement contributions increased as I earned my first paycheck at my new job. Expenditure was pretty reasonable at $4,193. Underlying investment returns were modest and a little negative in USD terms.

Net worth fell in USD terms by $3k (rose by $A10k in AUD terms to a post GFC high) to $498k ($A499k). Here is the net worth chart in AUD:



For USD see last month.

There was little change in investment allocation. Investment return was a loss of 1.36% in USD terms. In AUD terms we gained 1.20% and in currency neutral terms 0.70%. All asset classes gained with the exception of foreign non-US shares. Private equity was the best performer with a 5.01% gain.

Moominmama Portfolio Performance January 2011

The MSCI World Index gained 1.59% in January. Moominmama gained 0.98% but not because of equities performance. The gain is mainly due to the strong performance of Sterling this month. Most of those bonds are Sterling related bonds. Hedge funds also did well. Indian and Brazilian stocks and the local currency performed very badly.