Wednesday, January 18, 2012

New Investment: Argo Investments

Back in 2008 I blogged about traditional Australian Listed Investment Companies. These have lower management fees than Australian index funds and in the long-run seem to slightly beat the index by selecting investments and selling options. I finally made an investment in Argo investments. The current book price relative to net asset value is better than Australian Foundation or Djeriwarrh and unlike Milton it is marginable at CommSec. They also have an annual share purchase plan, which I might participate in. I started small with 1900 shares - just a bit less than $A10k.

This investment is despite really being overweight in large cap Australian share according to my criteria and desiring to increase liquidity. My last post showed that our allocation to large cap Aussie stocks, though still high has been coming down. And I think we can increase liquidity and invest a little.

And I'm not even sure it makes sense to borrow money at CommSec's high rates. The alternatives are to borrow at lower rates via Interactive Brokers (but I need to get money into the account and do currency conversions along the way) or invest in the CFS Geared Share Fund. The latter has a very high management expense but they access funds at lower interest rates. Also, holding this investment with Interactive Brokers probably will make it hard to participate in dividend reinvestment and the share purchase plan. I guess I'll do a bit of each. None is ideal.


Darren said...

Very interested in future posts re your findings with IB. I'm with both CFS geared [unhappy with performance], but also have shares in Djeriwarrh somewhat as compromise for market falling. I haven't computed the sharpe ratio etc though, so should get around to that to see if I'm getting my money's worth.

Keep up the good work and posting, much appreciated!

Bigchrisb said...

I keep debating between using exchange traded funds, LICs and individual stocks to gain a broad market exposure (my target is 2/3 Australian exposure, 1/3 international exposure). At the end of the day, I have a bit of a mixed bag, with 42% in individual stock (but pretty much matching the ASX20), 13% in REITS, 3% in LICs, 10% in domestic ETFs and 31% in international ETFs.

For a buy and hold portfolio, where I'm just trying to join the market, I'm consistently torn between the administration and cost of holding individual stock. I guess on the plus side, holding individual stock probably gives a bit more diversification against a fund manager going belly up?

mOOm said...

A fund manager going belly up shouldn't lose you money unless you mean a leveraged fund.