Money manager churn alert!

Which of our favourite Dividend Fund money managers has just disclosed an annualized portfolio churn figure of 481% for the first half of 2009? Up from 254% as of December 31, 2008?

I’ll give you a hint. Think fire-breather.

If you are selling the entire portfolio every 10 weeks, how can retail investors expect a fund to hold stocks long enough to collect any dividends?

This may explain, at least in part, why net revenue from the portolio’s stocks makes up just ~25% of payouts for the first six months of 2009. The vast majority of 2009 H1 distributions are actually being financed by the same capital that investors originally put into the IPO, even in the fund’s second year in business, even though that is hard to discern from the financial statements. Strangely, “Distributions from Income” on pg. 6 amounted to $0.30 for the first six months of the year, even though “Total Revenue” equalled just $0.24/unit.

How’s that math work exactly?

MRM
(disclosure – this post, like all blogs, is an opinion piece)