26 December 2016

Target Date Funds - spot the Target!

It may well be your pocket that is the target. The concept of Target Date Funds may be plausible but in practive they may well be (1) more expensive than necessary to achieve their stated aim and (2) more a clever marketing concept than a proven investment strategy.

1 December 2016

Gold is the ultimate protection

Governments are waging a silent war against Cash. They don't do it openly but sail in the tailwinds of Financial Technology Companies, including Credit Card providers and Banks that do the dirty work for them. Cashless societies open the door to total control of all activities and by implication also total control of the citizens, or maybe one should call them worker ants that are only allowed to finance the more and more absurd spending perpetrated by the Polit-Establisment. Gold is even more unpopular in that Nomenklatura and it is no wonder that there are persistent efforts to make it difficult to buy and hold gold.
Given that it is the ultimate insurance policy against total state control of your wealth careful planning is imperative when purchasing and storing gold.

Sad end to Swiss Bank Secrecy

Switzerland has been created as the result of a tax revolt against its Hapsburg (Austrian) overseers. So it is sad that a proud nation abases itself to become what can only be seen as a tax collector for the USA. Different nation states with different laws and customs were the main factor behind the fantastic cultural and economic development of Europe - in stark contrast to the unitary state of China.Nevermin d that bank secrecy helped any number of persecuted people to escape from Nazi Dictatorship with their lives and the means to start a new life elsewhere!

Credit Suisse said to freeze accounts in search for U.S. assets

Do you know your Asset Allocation?

While picking individual stocks, currencies, bonds or even countries and sectors may be sexy most investors do not know that the decision about asset allocation (stocks/bonds/currencies/real assets) is the most important factor in achieving long-term investment success. Depending on your personal situation this holistic approach should also include real estate and interests in business, either directly or indirectly held.

31 October 2016

It all comes down to style in Managed Futures (HedgeWeek)

30 October 2016

How many fees does your Fund Manager charge?

News that M&G, one of Britain's largest investment fund providers (and part of Prudential Insurance) charged investors in just one of its funds (the £15.5 Bio Optimal Income Fund) an administration fee of £34 Million last year demonstrates how important it is to keep a close watch on the expenses incurred by your investment portfolio.

17 September 2016

Top 40 Wealth Managers in USA

Nice job Barron's Magazine, but pretty useless table, no information on performance, fee structure. So a lot of work but the crucial data is missing. Bigger is not better!

12 August 2016

Market Professionals at an advantage

Any Retail Investor, small or of 'high net worth' should watch the activities of investment professionals like a hawk. Market Insiders always have an information advantage that can allow them to charge higher fees or find excuses for under performance. 
The Dirty Little Secret of Finance: Asymmetric Information (Bloomberg)
Information asymmetry: Secrets and agents (The Economist)

14 June 2016

Smart Beta - Old Wine in new Bottles

Be careful not to be taken in by fashionable slogans. Smart Beta is currently pushed by Asset Managers but basically it is nothing else than Style Investing - and that idea has been around for decades! The problem is of course that you still have to select the right style/strategy.

11 June 2016

Chinese Shares - ready for Mum and Dad?

News that a commercially-driven entity may decide how billions of investor's savings are deployed in the fast-growing Chinese Equity markets should set alarm bells ringing. After all, China is still in the grip of a communist dictatorship. Recent economic growth may well be impressive - unless you are belonging to the millions who have been pushed out of employment by cheap Chinese labor - but that should not mean that question of morality and fair play are forgotten in order to lure investors into a market that is anything but transparent - at least not as far as 'Western' Investors and Savers are concerned. Allowing index designers free reign over the fate of our Savings is totally irresponsible.
China's A-Shares Prepare to Flood Your ETFs (Barron's)

31 May 2016

Buy and Hold - good strategy - esp with benefit of hindsight

We all can see that buying in the distant past - be it stocks, property or gold - was a good strategy that paid off in spades. It may well still be the best strategy for future investments - especially given how difficult market timing can be, for the amateur investor but also for the professionals.
But blindly buying and holding per se is not a strategy, I would rather tend to call it a guideline around which the really difficult investment choices have to be made.
The not-so-secret way millionaire investors get way richer (Yahoo)

29 May 2016

End of Hedge Funds?

Gloom and Doom may work for Marc Faber but it should not overshadow rational analysis of the Hedge Fund Industry.
Performance comparison with the S&P means to compare apples with oranges. And there are many different strategies that all have to be looked at from a different angle.
Costs have - and continue to be - high and it is not clear why megafunds should be able to charge fees of up to - and in extreme cases more than - 2 percent and at the same time charge performance fees of around 20 percent, often without application of any reasonable hurdle rate.
What has to - and will - happen is that the structure of traditional asset management and hedge fund management will slowly get unified.
Exceptional managers may be able to receive higher fees, but even in the traditional asset management space there is a wide variety of fee levels that investors seem to be happy to accept.
Careful scrutiny will be the order of the day when looking for 'active' managers. The trend to passive investing may continue for a while longer, it will stabilise when the passive part of assets under management reaches the 60-70 percent range. Sharp competition for the remaining 40-30 percent of the asset management cake will lead to a compression of fees.
Performance fees - not only for hedge fund managers, but also for private equity and other alternative fund structures - are problematic in any case. For good reason US regulators placed severe restrictions on their use until the mid-1980s. The way they are structured gives too much of a one way option for the providers of asset management services.
It may be the end of hedge funds as we know it (Business Insider)

5 April 2016

Understanding Convertible Bonds (IPE)

How many Funds do you need for a diversified Portfolio? (CNN)

Convoluted Investment Fraud sucks in 'Sophisticated' Investors (Bloomberg)

29 March 2016

How to pick a Financial Adviser

It could be the most important decision you make in your life (after selecting the right spouse and finding a career that is fulfilling)
How to pick a Financial Adviser (Washington Post)

27 March 2016

Fraud Watch

Credit Suisse, the Jailed Banker and the Oligarch's Millions (Bloomberg)

26 March 2016

Masters of the Universe or Men of Clay?

Do not get seduced by glamorous names or 'sexy' investment stories. The recent implosion of the much hyped Valeant should be a warning.

18 March 2016

Sector ETF's better than Market Index

While no advocate of market timing for the average investor I think it is preferable to keep an eye on overvalued or undervalued market sectors and allocate new money based on constant sector weightings. Index ETF's are a great - and cheap - instrument to get exposure to the Equity Market but this approach avoids money being allocated to expensive and possibly overpriced market sectors. It is perfectly possible to create a near-perfect replication of the overall market by carefully selecting sector ETF's.

How is your Financial Adviser, Planner, being paid?

Costs are a major drag on performance and the one variable that you can control with certainty. So always check how your Financial Adviser or Planner, is compensated. This documentary from Australia is a good example of what you should avoid. It examines a sales-driven culture inside a major bank that has been described as profit at all cost - a culture that has been built on commissions.

16 March 2016

Financial Planning - is it worth the Fees?

A glimpse at the fees charged by Standard Life's Financial Planning affiliate 1825 is an eye-opener. The example provided - I suppose it would illustrate a middle-class family, comfortable but by no means wealthy - is already a warning as the fee appears to be quite high. What hourly rate is the basis for the implied hourly charge? Would the client learn much more than he would be reading any of the available DIY investment books?
Many people are not really able to look after their finances. Most often this is due to spendthrift habits, but many are also not too keen to get into the nitty-gritty of investment.
But why would you use a Financial 'Planner'? In my opinion the selection of a Financial Adviser is a much more critical decision to make. Paying a Planner and then paying fees for an Adviser would lead to exorbitant expense.
Looking at the annual maintenance fees charged by 1825 and adding the fees charged by the typical Investment Adviser is just paying over the odds.
One should not forget that any investment vehicle (fund) the Adviser selects for you will also charge various fees.

14 March 2016

IPO offerings - Buyer beware!

Looking at the valuation of the Purplebrick online property agent one has to ask if investing in publicly offered shares is really a suitable investment option for the broader public. It does not take a mathematical genius to figure out that there is one certainty: the selling promoters and insiders make a hefty packet while the investors coming in at a later stage buy into a lot of hope.  I am all for 'free' markets but one has to wonder whether the regulatory and tax framework does not need a healthy dose of adjustment. Listings such as these may only be backed by 'skilled' (?) professional intermediaries, but they are ultimately investing the savings of Joe Sixpack, not their own money. The London Stock Exchange has been converted into a profit-seeking business which is a shame as it should really be in the forefront of guarding the end investor's interests above all other objectives. Talk of shareholder 'engagement' is really so much hot air if that is not the case. That one of the backers of this issue has reaped a double digit bonus in the recent past adds to the discomfort of the interested observer
 (20 December 2015)

18 January 2016


News that Pure Gym will give investors (or shall I say punters?) the opportunity to value it at anything close to £500 Mio must raise an eyebrow or two. Looking at the Gym Group which has already publicly traded shares it should be clear who the main beneficiaries of any going public would be if the valuation would be on a similarly elevated basis: These are the Gym Group metrics: Market Cap £287 Mio, 12 month revenues a grand total of just over £52 Mio and if that is not enough of a yellow light - tangible book value is £27.6 Mio vs long-term debt of £78 Mio. You may want to keep an eye on your financial adviser when he submits your next account statement. As a matter of principle, PBA advises against taking part in New Issues unless there is a very clear valuation argument in favour of the Buyer.