Q: Does the 30-40% of the dividend being return of capital in this fund mean that NAV is always being eroded? I want to buy this for the long term but not if NAV is obviously always declining.
5i Research Answer:
Hamilton's website shows a much higher percentage of ROC. Return of capital does not automatically mean NAV decays, but in many cases it can. UMAX has a fairly short history, so it is hard to ascertain what might be the situation going forward. The unit value has declined from $15.95 on day one to $14.98 today. This decline is less than the amount paid out since inception, and the fund has a one-year return of 12.89% We would expect 'some' decay here but can't really predict until we see more time of performance and tax allocation.