FAQs |
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1. How is the Prime Momentum Fund different from other equity-based funds?
Our system-based investment process is based on Price Momentum; not forecasting or fundamentals. The investment strategy determines whether the overall market is displaying positive or negative long-term momentum and:
- moves the portfolio to cash (potentially 100%) when momentum is negative, to protect investors from a sustained market down-turn;
- invests in leading companies within the S&P/ASX 200 when momentum is positive. Rankings are based on price momentum.
2. Is the investment process subjective or objective?
The investment process is entirely objective and system driven. This is an important advantage in volatile and critical market conditions where emotional and behavioural biases of fund managers can negatively affect investments decisions.
3. What is the experience and expertise of the people involved? How can I have confidence in them?
Tony Porter has over 15 years experience in trading financial markets and managing investment portfolios at Citigroup/Salomon Smith Barney, Hartleys and Pembroke Josephson Wright. His expertise covers a range of investment management areas, including large and small capitalisation companies and derivatives. He is director of two funds management companies: Porter Capital Management Pty Ltd and Xcelerator Capital Ltd.
Dr. Bruce Vanstone is an Assistant Professor and holds a PhD in Computational Finance. He is a regular academic publisher and presenter at the international level on trading systems design and testing. He teaches these methodologies at university Masters/ PhD level and has written the textbook for the course: Designing Stock Market Trading Systems. He has extensive experience in applying statistics, mathematics, advanced technologies and computing to the development of investment processes and systems. His key strengths are in the development, testing and benchmarking of quantitative trading and investment systems.
4. What do Porter Capital Management do?
Our objective is to preserve and grow investors' capital. To achieve this, we:
- Develop investment and trading strategies;
- Test and identify if they are robust; and
- Implement those strategies on behalf of investors.
5. Is there key man risk with Porter Capital Management?
Key man risk is minimised because the investment process is entirely system driven.
6. Is my investment secure?
The Prime Momentum Fund is a registered managed investment scheme with the Australian Securities and Investment Commission. The Scheme enables investors to invest in a portfolio of shares and/or cash managed by Porter Capital Management.
Complete separation of duties between the legal entities outlined below serves to mitigate risk for investors:
- Porter Capital Management is the Fund Manager, conducting research and managing the Fund’s investments in shares and/or cash.
- Next Financial is the Fund Administrator and provides comprehensive reporting to investors on the Fund’s performance, including tax reporting.
- Wilson HTM Investment Group is the legal Responsible Entity for the Fund.
- BNP Paribas acts as Custodian of the Fund holding securities in their name on behalf of investors.
7. How often will I receive updates?
You can view your portfolio online at any time. Performance updates are issued monthly.
8. Will I be able to withdraw my funds when I want?
The Prime Momentum Fund should be considered a medium- to long-term investment, but the Administrator has the ability to make daily redemptions (paid within 2 weeks). Investors in the Prime Momentum Fund are the beneficial owners of their underlying shares or cash and can transfer those shares out of the Fund at any time.
9. Is there a risk of redemptions being frozen?
The Fund only invests in ASX200 equities and cash (held with BNP Paribas). The ASX 200 is widely followed by institutional investors and the high liquidity should ensure that there is always a ready market for your shares.
10. Will I be subject to capital gains tax if I transfer my shares out of the Fund?
No. Investors can transfer their portfolio without giving rise to a CGT event.
11. Does the Fund charge exit fees?
No. There are no exit fees if you withdraw your funds.
12. Will I be affected if other investors withdraw their investments?
No. Unlike managed investment schemes where you own a Unit in a Trust, investors are not pooled with other investors but are the beneficial owners of their shares.
13. How does Prime Momentum fit with the rest of my portfolio?
The Porter Capital ASX200 Prime Momentum Fund offers diversification from direct equities and/or equity-based managed funds due to its:
- momentum-based style;
- systematic and unemotional process; and
- low correlation to traditional equity managers and major indices.
14. Is there an optimal time to invest in the Prime Momentum Fund?
Investors should approach investing in the Fund with a 3 to 5 year time frame. Accordingly, there is no optimal time to invest.
15. Can overseas residents invest?
Yes. The Fund is open to overseas investors. In Section 2 of the Application form write “Non Resident” where you are asked for a Tax File Number and include an original, certified copy of your Passport with your application.
16. Will the fund be closed to new investors in the future or is it open ended?
Yes. The fund will close to new investors when the amount of funds under management starts to hinder performance or the ability to move into and out of market positions.
17. Will I receive income from this investment?
This is not an investment suitable for investors who require income. The strategy’s focus is on capital gains. Saying this, investors may receive dividends from time to time on positions held in the portfolio.
18. Does MTM short, use options or leverage?
No. The asset classes are: stocks within the S&P/ASX200 and cash. No borrowing, derivatives or short selling is utilized.
19. What are ALL the Fees?
Account Opening: $150
Investment and Reporting Fee: 1.3% p.a.
Administration Fee: $27.50 per quarter (this includes comprehensive tax reporting)
Performance Fee: Paid when the Fund outperforms the S&P/ASX200 Accumulation Index. 20% of the out performance over and above the S&P/ASX200 Accumulation Index calculated quarterly. No performance fee is paid upon negative returns and any under performance must be recouped.
Advisor Fee: May be applicable if you invest via an Advisor.
20. How does the performance fee work?
Porter Capital receives 20% of any returns we produce for you above the index return. Performance fees are applicable each quarter. If for a quarter we underperform the index, that underperformance is carried forward to the next quarter. Therefore we must “make up” this underperformance and produce returns above the index before there is a performance fee paid. Porter Capital makes money only when you make money above what you would receive if you were invested in the S&P/ASX200 Accumulation Index.
21. How do I apply?
To apply, go to the “Find Out More” page on this website and tick “Invest Now”. An application form with a Checklist will be sent to you. Simply follow the Checklist to become an investor. For any queries please call Client Services on 1300 13 44 22 and speak to Lee.