24 October 2015

Is your Portfolio valued correctly?

Valuing the positions in a portfolio is no easy task. But this does not mean that you should take on trust what your investment manager puts on the statements that he sends out to you. Not only will incorrect pricings affect the amount of money you can withdraw from your portfolio, the commissions (fixed or performance-based) that you get charged will also depend on the correct amounts.
Saba Suit over Canadian PensionFunds goes to Mediation (Bloomberg)

18 October 2015

Private Equity fees a 'Trade Secret'?

Given the fact that all investment funds that are offered to the Public are regulated in one way or another is should be noted that one important aspect escapes the attention of the (usually overzealous) regulators. When it comes to the transparent disclosure of management and performance fees the end investor is usually left in the dark. His fiduciaries in the pension funds, private banks or other intermediaries may be able to dig deep into the agreements with the private equity operators but when the end investor - who ultimately bears all the risk - wants to have the full picture he is usually fobbed off with lame excuses (protection of 'trade secrets' one of the more popular ones).

15 October 2015

Why Investors need to scrutinise all Fees

A Horrow Story of abusive fees-
  • Promised Services are not performed
  • Overpay for Average Returns or Underperformance
  • Management Fees based on inflated Asset Values
  • Valuation Methods changed opportunistically
  • Back-door Fees via non-independent Experts
  • Detrimental Allocation of Profits due to Outperformance
  • Performance Fees not calculated properly
  • Non-Business Expenses charged to fund
  • Transactions executed at false prices
If this is not enough to make you seek advice on portfolio monitoring you only have to blame yourself if the net returns you receive are disappointing.

Keep in mind that even the most prestigous Fund Managers or Private Banking names should not escape close supervision.