Passive Income Fund (USA Commercial Property) - Steve McKnight

There are a few questions I have as I have no idea how this works lol.

1) From a taxation point of view, would a consumer need to pay tax in both the USA and AUS?.
2) If the money was brought back into Australia would it be effected in a negative way since the dollar has dropped down.
3)With his fund are they buying assets e.g.: commerical property and then leasing them out and the return is based on that?

 

You pay tax in USA and then credited back in Australia. At least that is how my USA income works. No expert with this fund

Investors are currently making around 40% on currency as Au$ is much weaker than US$

yes buying asset, have return on rental income and bonus of 40% on money due to currency play


I have not invested in this fund but I have seen lots of info on the figures on his site

 

Where are the units issued? If here I would have though you would pay tax here with the fund paying tax in USA.

 

ITs an AUS managed investment scheme - has its own AFSL and pricing is done here. its effectively a managed fund - and I invest in many. The price is a Net Asset Value, and for this fund it started at $1 and is now $1.41 per unit. I have seen better funds and yes, part of the financial highlights are that it provides an exposure to FX. I am not sure if they have a traditional FX overlay strategy like most fund managers "doubt it" - rather a clear exposure due to the weakening AUD.

When assessing the info in the attached Performance Data - Passive Income (USA Commercial Property) Fund look at the increase in the gearing ratio and also drop in performance in last two months. The word 'consolidated' is important, half the bloody accountants don't understand it.

ITs an Australian managed fund - there a quite a few fund managers with similar funds run by big known fund managers, Steve has done well by using PI.com and his reputation with his mentoring to get people into the fund. I have seen the best of hedge funds and none of these guys have investment banking/ large investment mgt experience - I mean Paul is a CA not a fund manager and I can't see Keiths experience with managing a similar fund? Plantation Capital Ltd & Passive Income Fund Management Team - from a qualitative analysis thats my first question, then lack of track record of success is second followed by their investment philosophy and corporate governance.....all of which show they are small players which would increase my risk rating significantly. This is a simple fund manager due diligence checklist which we would execute on every fund manager...followed by their compliance policy.... Further where are the audited financial statements for the fund and the responsible entity? these will need to be review and also who is the custodian? who processes the NAV on a monthly basis and how do you know its accurate?

These are general FAQ from my experience. I have a fund that has returned 60% since inception - I just redeemed all units - this is a time that you need alot of skills to do well - I am moving to safety.

Cheers Ivan

 

Steve has now replied to your questions on PI.com - for the detail please refer to pi.com....

 

Ivan
that was quick.

What is your affiliation with Steve?? Are you involve in the fund, curious??

Thanks

MTR

 

Please Read my previous post - No I am not associated in any way. My due diligence above is what we done with fund of hedge funds investing and general commonsense.

The guy who is questioning, copied the same post on PI.com - I did not alert Steve to the post here, he reads his own forum and responded. I asked the member to contact Steve direct but he decided to post public which is fine.

Cheers Ivan

 

Oops sorry I should have read it all carefully, missed this bit.

Thanks
Marisa

 

Ivan,
I had no interest in contacting the fund manager to answer concerns I had about the fund and its associated returns. To get an unbiased view of the fund, I hardly doubt the fund manager is going to provide that. You may believe that but I don't.

I figured some may have had experience with the fund on this website which I have only recently joined myself.....I had been looking into the fund previously and thought it was an appropriate forum to ask the same.

D.T mentioned that there was some discussion on the topic on Steve's own chat website which I subsequently had to join as a member to review. I had no qualms in doing this and posting on Steve's own forum as I did here.

Of interest, I noticed that the one member who questioned the fund back in 2012 had been banned from the forum, which further raised concerns about true objectivity.

Steve has replied and appears to be quite defensive in his reply. He is entitled to his views and I have responded to his replies.

You obviously have clients invested in the fund and I hope that you are looking at the returns objectively as I have, to do the best by your clients. If my concerns are completely wrong then that would actually be a good outcome. I am not invested in the fund and would not invest in the fund based on my research.

I will watch with interest to see how the returns stack up over the life of the fund. I have no desire to get into a debate about the fund. I was interested in a balanced view from anyone who may have been invested in the fund however not just the spiel on his webinar.

 

Hi there -

Again I have no interest in the fund, we manage a heap of SMSFs and many decided to invest in the fund, I did not recommend the investment otherwise my opinion would be biased. I provided some constructive feedback about the board which I think is relevant. Anytime a client asked me for my view, I provide a general view and my view is summarised above. I have dealt with some heavy fund managers so I have some experience in that regard.

I feel that if you are looking to invest in the fund, ask them what they think and read the info memo/ PDS and analyse - however what Steve says is complex accounting which only accountants can understand....

I don't necessarily care - however please provide support for the reasoning you have that the values are inflated? if you have evidence that may assist others to raise the same question and receive some communication from the fund manager to support the appraisals. I have not listened to the webinar though. I have seen a heap of property funds and your questions are valid, however Australian Financial Reporting is in accordance with Accounting Standards, most of which investors have no clue what it means....He did say the accounts are audited, and if the investments are materially mistated then they are ******....the auditor reviews each valuation and ensures the valuation is reported within a threshold and if not the report is qualified. Ask for a copy of that report (should be public)....that report is what the investors rely on (did not do much good for Dick Smith!!!)

Hope that helps.

Cheers Ivan

 

Geoff

Interesting, I like to go solo for control, all to their own.

However, on the face of it just on the currency play McKnight's fund has made 45% profit and that is without growth. I don't know too many funds that will provide these returns.

What I am seeing in US at the moment is just continued growth in property. I have looked at many markets recently and its the same story everywhere, they have doubled, tripled in value and commercial is also moving.

MTR

 

But Steve mC is buying in Texas, Florida, Atlanta, basically wherever the deals are.

It's still a currency play 45% on clients money today with returns of over 8%

the downside is your money is locked in I think perhaps 8 years not sure?

mtr

 

From memory there's regular periods each year when you can buy in or get out?
Not sure though.

 

In the end, I have spent way too much time looking into this fund of which I have no financial interest......it caught my attention though that's for sure! Good luck to those invested.

I have got my own real estate journey to study up on here at PC.

 

Well, at least it was good practice.
You'll know what to look for next time.

 

For those interested, here is some light reading.

His made some serious profits for his clients, in the main the money play, there is around 35% profit on this alone.

What do people think of Steve's the US Passive Income Fund? - PropertyInvesting.com

 

I wonder what he will do when a reverse trend on the currency market will happen, like the one that was on AUD from early 2009. It won't happen soon, but it'll happen.

 

I think investors will be out of the fund and realise profits before this happens, he has a track record of getting it right.

He is now selling all his resi properties in Florida purchased in 2011/12 made a killing, doubled his money on C-D grade properties buying when Au$ 1.09, I was not interested in this product, too many headaches.

He made money with regional Vic, what was it 130 properties in 12 months, cheapies doubling money and then offloading prior to markets tanking, same with NZ. Those who followed should make money, he won't recommend properties but provide the tools, up to the investor to do the DD

Got to admire this guru, seems to always get it right.

MTR