Flow Through Shares

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Park
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Flow Through Shares

Post by Park »

https://www.policyschool.ca/wp-content/ ... es-jog.pdf

The above link is a study on flow through shares, and a quote is given below:

"But the steepest price has arguably been borne by investors, with returns on flow-through shares
performing extraordinarily poorly. For small companies that issued these shares, the annualized
absolute return was a nearly 100 per cent loss. For larger companies, the returns were not as bad
— negative 14 per cent — but still a loss. And if adjusted for corresponding benchmarks, the returns
were even worse. From the $2.5 billion raised from Canadians using flow-through shares, investors
have lost $1.2 billion."
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adrian2
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Re: Flow Through Shares

Post by adrian2 »

http://www.norrep.com/funds/flow-throug ... rough-lps/

After tax returns by investors since 2001:
90%
24%
99%
89%
77%
74%
29%
-65%
-59%
-2%
11%
-16%
42%
42%
-41%
-12%
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
Park
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Re: Flow Through Shares

Post by Park »

adrian2 wrote:http://www.norrep.com/funds/flow-throug ... rough-lps/

After tax returns by investors since 2001:
90%
24%
99%
89%
77%
74%
29%
-65%
-59%
-2%
11%
-16%
42%
42%
-41%
-12%
This is the returns from one company.

After tax returns depend on one's tax rates. From what I've read, you can break even with a 33% pretax loss, if you're in a 50% tax bracket. Also again from my limited reading, the costs of flow through share investing aren't low.

It looks like a bet on active management. If one can determine who the better future active managers will be, then this is a good idea. If you can't, then I would consider this to be a form of gambling, rather than investing.
Flaccidsteele
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Re: Flow Through Shares

Post by Flaccidsteele »

Park wrote:It looks like a bet on active management. If one can determine who the better future active managers will be, then this is a good idea. If you can't, then I would consider this to be a form of gambling, rather than investing.
I agree.

Good assessment.
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