| 1. |
Why should I use Prime Value Asset Management? |
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As a boutique fund manager, where the shareholders and the investment managers are cornerstone investors, we manage your investment together with our own money in "building wealth together". Our aim is not merely to out-perform the Benchmark Index, but to deliver consistent superior, long term, absolute returns to Investors. We have achieved this objective since the Fund's inception.
In recognition of the success of the Funds, Prime Value was the winner of the Standard & Poor's "Boutique Fund Manager of the Year" award in both 2005 and 2006. The Prime Value Imputation Fund was also the winner of the Standard & Poor's "Australian Equities Fund of the Year" in 2005. Other awards include Prime Value being nominated as a finalist in the "Australian Equities" and "Rising Star" categories in the Money Management Fund Manager of the Year 2005 awards. |
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| 2. |
What are the key strengths of Prime Value Asset Management? |
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Prime Value embrace the four most important criteria in the selection of a fund manager:
- Solid financial integrity of the investment management company
- Alignment of interest of investment managers who are incentivised through profit-share in the business
- Proven investment philosophy and processes, with strong performance track record in core areas of expertise and a focus on stock selection and risk management skills.
- A highly qualified, experienced and stable team of investment managers.
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| 3. |
How long has Prime Value Asset Management been managing money? |
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Prime Value was founded in 1998 and launched the first Fund, Prime Value Growth Fund, in April 1998. The Imputation Fund was subsequently launched in December 2001. The board of directors and the investment managers have substantial investment experience in various corporations and institutions. |
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| 4. |
Does management invest in Prime Value's Managed Funds? |
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The shareholders and investment managers are cornerstone investors in both Funds. |
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| 5. |
Are Prime Value's Managed Funds regulated? |
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Prime Value acts as the manager of the Funds and is the Responsible Entity of each of the Funds. The role of the Responsible Entity is to hold the property of the Funds on trust for the relevant Investors and to operate the Funds in accordance with their respective constitutions and the requirements of the Corporations Act.
Prime Value is a public company limited by shares, which holds an Australian Financial Services Licence (No. 222055) authorising it to operate each of the Funds.
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| 6. |
Are the Managed Funds protected by a custodial arrangement? |
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Yes. Our external custodian is Australia and New Zealand Banking Group Limited. We have engaged them to perform certain custodial services as outlined on page 32 of our PDS. |
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| 7. |
What are the returns for the Funds? |
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Prime Value manages two Australian equity funds. The Prime Value Growth Fund has achieved an annualised return of 19.6% since it was established on 10 April 1998. The Prime Value Imputation Fund has achieved an annualised return of 21.5% since it was established on 20 December 2001. These returns are calculated after management fees and disbursements but before performance fees, as at 30 June 2008.
For the latest returns, please see the monthly Fact Sheets. Past performance is not necessarily an indication of future performance. |
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| 8. |
Do you guarantee the capital? |
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No, we can not guarantee the return of capital. We will do our very best to be a good steward in balancing between the need of wealth creation and wealth preservation. Due to the volatility of underlying assets of the Funds and other risk factors associated with investing, returns can be negative (particularly in the short-term) |
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| 9. |
What are the risks involved? |
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Making any investment is a risk. Investing in our funds involves a similar risk to investing in Australian stocks. See page 19-20 of our PDS for more details on the risk factors. |
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| 10. |
Is there an Entry Fee and/or Exit Fee? |
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In general, there are no fees when your money moves in and out of the Funds. Up to 3.0% may be charged as an upfront adviser commission if mutually agreed between the Investor and their adviser.
Prime Value discourages short term investing and for this reason imposes a 2.0% early withdrawal fee on amounts invested for less than 12 months. The Funds invest in a portfolio of equities designed to deliver returns over the medium to long term. |
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| 11. |
How about the on going management fees? |
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For direct investors, the manager receives management fees of 1.23%pa (inclusive of GST and applicable RITC) and there are administrative costs of approximately 0.205%pa, giving an Indirect Cost Ratio (ICR) or 1.435%.
For indirect investments, through an IDPS or IDPS-like scheme such as a platform or master trust, the Indirect Cost Ration (ICR) is 1.23%. Total fees of indirect investments may be higher and will be detailed in the disclosure documents provided by the IDPS operator.
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| 12. |
How do you calculate the performance fees? |
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For direct investments, the performance fee is 20.5% of the performance (after all other fees) in excess of the S&P/ASX 300 Accumulation Index.
A simple example:
If an Investor invested $100,000 on 30 June 2003 and the value of units increased (after management fees and administration costs) to $115,000 as at 30 June 2004 and if the S&P/ASX 300 Accumulation Index had risen by 10% over the same period (giving a theoretical investment of $110,000) then the performance fee would be calculated as follows:
Performance fee
= 20.5% of performance in excess of Benchmark
= 20.5% x ($115,000 - $110,000)
= $1,025
In other words, the net value of the investment (after all fees and costs) will be $113,975, representing a 13.975% return. |
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| 13. |
What is the buy / sell spread? |
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There is a buy/sell spread of +/-0.38% of the unit price. This spread reflects the cost of buying or selling Fund assets, including brokerage and government charges. The buy/sell spread is not a fee paid to Prime Value but will affect your investment return. |
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| 14. |
What is the minimum amount of investment you accept? |
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The minimum investment amount is $20,000. We may allow an investor to start investing with a lower amount where appropriate. This may include children & family members of existing investors. |
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| 15. |
If I have a Self-Managed or DIY Superannuation Fund can I invest in your Managed Funds? |
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Yes, if you have a Self-Managed Superannuation Fund (where you are legally responsible for your own superannuation), then you could look at investing in our Funds as part of your superannuation investment strategy. In fact, many of our investors are investing through their Self-Managed or DIY Superannuation Fund. We suggest you seek independent advice. |
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| 16. |
Does Prime Value’s high returns presumably mean it takes greater risks? |
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There are a number of ways to define and measure risk. In terms of the "risk" of losing money, any investment in stocks will incur a high level of risk. However Prime Value does not consider that the stocks it invests in are of "riskier" nature than the market average; in fact we would consider the companies we invest in to be of a lower risk than average.
Another way of defining investment "risk" is the deviation of returns from those of the benchmark. Achieving returns which are consistently higher than the benchmark involves avoiding "index hugging" which by this definition results in higher tracking error or risk. However by avoiding mimicking the index, Prime Value can add value through superior stock selection and portfolio strategy and achieve returns higher than the market. |
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| 17. |
Surely small firms are at a disadvantage to the big multi-nationals? |
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This can be true, but small firms maintain greater flexibility and don't involve a large committee in making investment decisions. Smaller firms can also invest in a larger range of companies (such as small caps) which may offer attractive investments return potential. |
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| 18. |
When will size start to reduce your investment returns? |
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We don't know. However, we aim to develop and maintain a very focused investment team to have maximum flexibility and responsiveness. |
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| 19. |
Do the Funds pay distributions? |
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Distributions are paid half-yearly, at 31 December and 30 June. Distribution amounts are dependent on dividends, interest income and realised capital gains/losses received in respect of Fund assets in any given year. It varies from year to year. |
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| 20. |
What are managed Funds? |
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A managed fund pools the money of individual investors. This pool of money is then used to buy a range of different assets according to the individual investment policy of the fund. For example, a typical Australian equities fund will be invested in companies listed on the Australian sharemarket.
Managed funds are also called unit trusts; when you invest in one of the Prime Value Funds, your investment buys you units in the Fund. Your investment is not a direct investment in the underlying assets. The value of the units you hold represents the value of your portion of the assets that the Fund owns. As a result, the unit value can rise and fall, just as the market value of the underlying assets can rise and fall. |
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| 21. |
What are some of the key questions you have to ask yourself before investing? |
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a) What are your investment objectives?
b) How long do you want to invest?
c) How much risk can you tolerate?
d) Are you looking for income? Capital gain? Or both?
We suggest you seek independent financial advice to determine the appropriate investment solutions for your needs. |
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