20 August 2019

Megatrend Funds - is this a clear strategy?

Bankinter jumps on the "Megatrend" train, launches a fund that seems to be able to invest in a mishmash of asset classes. "Fund invests above 60% in companies without any constraints in terms of market capitalisation, sectors, currencies or geographies.The remaining part of the portfolio will be invested in public and private fixed income instruments.The fund's portfolio could also have exposure to other asset classes or factors including commodities, credit risk, volatility, interest rates, inflation and currencies."
So what is the strategy? And how will the performance be measured as there is no clear benchmark against which such an asset mix can be compared.
Investment Europe

5 August 2019

Questions to ask before you buy any bond

I have a somewhat critical view of rating agencies - they should not be paid by issuers as this could create a conflict of interest. But the regulatory authorities seem to condone this practice.
But if you as a non-professional investor/saver are offered the opportunity to invest in a bond you should ask some basic questions before taking the plunge.
Now with interest rates globally at rock-bottom bonds that offer high interest rates may at first glance look attractive. So ask the following questions:

Who is promoting the bonds? Does the broker/investment bank have skin in the game?
Who is issuing the bonds? Is the issuer guaranteeing the bonds? How long has he been in the business? What is their track record?
If there is collateral or any guarantee - what is behind? Is there a good margin of safety?
What is the maturity of the bond? You may not be able to get your money out before
Especially if there might not be a liquid market in the bonds
Is the bond rated by one of the large rating agencies? As mentioned above, they do have their problems but no rating would be a serious red flag
How high are the fees charged by the issuing/placing agents?
If a Financial Adviser recommends a bond, is he charging a commission from you or the issuer?

Please be aware that this site gives no advice on specific investments but is intended to offer general guidelines for educational purposes. You or your Adviser may have a look at this new offering in order to see how the above suggestions can be applied before you make any investment decision of a similar kind.

A current example of a bond issue would be Urban Exposure Finance Plc 6.50% Secured Notes due 13 August 2026
Urban Exposure launches Sterling Bond