Death knell sounded for private equity boom
Monday 30 June 2008
“The private equity boom is over, according to research published on Wednesday that showed the value of buy-outs slumped to a four-year low in the first half as the credit crisis and economic uncertainty took their toll.” Said by Martin Arnold, Private Equity Correspondent of the FT on June 25th 2008.
When I read these comments, I keep coming back to investment research fundamentals. Private Equity did make money, but for some not for many. Whilst the principles of private equity are excellent, I think too many managers and investors wanted to ride the private equity wave. It’s called greed. There was therefore opportunism with some investors benefiting, yet others are feeling the pain.
In fact the pain is not just the investors… “The slump in buy-out activity is grim news for the community of investment bankers, lawyers and accountants that has flourished in the City on the back of advising and financing private equity. Many of these groups, such as Goldman Sachs and Citigroup, have started cutting jobs and redeploying staff away from their private equity teams.”
It is our view that rather than being opportunistic, instead have a disciplined approach to your investment portfolio. By all means dabble in private equity, in the same way as a trip to Ascot, but try to be methodical in your approach.
Go back to basics. How much are you prepared to lose? Will the loss affect your future financial security? If you can cope with the downside, and enjoy the ‘thrill’, take your chance. We on the other hand, believe that being boring makes money over time. So perhaps instead go and climb mountains or even run a marathon for your satisfaction and thrills. It may be better for your wealth and health over time!
Categories: Asset Class Management, Diversification
posted by Murray Round Wealth Management @ 15:04,
Dissatisfied with your private bank…
Tuesday 24 June 2008
There is often a misplaced feeling of security with private banks..they rely on Mr and Mrs Inertia to simply remain invested with the bank as they have done for years..and years! But there is a growing trend for investors to move elsewhere. However, jumping from the one private bank to another…frying pan into the fire comes to mind…was the only real alternative. But the world is changing.
The ultra high net worth individuals..those with the spare £100m or so, there is a movement away from private banks.
In fact, Matthew Vincent wrote in the FT "Wealthy want more bank for their buck" ,on June 21 2008, has exactly this point...
“Some high-net-worth families aren't willing to wait, though. Scorpio Partnership, an adviser to the wealth management industry, already reports evidence of wealthy clients seeking alternative solutions. It cites the creation of up to 250 new family offices in Europe in the past year - staffed by dedicated investment managers hired directly by wealthy families - as an indication of the dissatisfaction with private banks.”
So what does this mean? The private banks have increased their marketing lower down the net worth spectrum. But if the ultra high net worth investors are doing something different, why don't investors with £1 to £25m do the same?
The answer is they can. The family office concept is available with firms similar to ours.
The key is to segregate the advice from the investment. The problem for investors is the search for like minded firms such as ours is difficult. The private banks have millions at their disposal to market themselves and tell everyone how great they are…but for investors who do want to follow a trend led by ultra net worth, they can start with a name like Murray Round.
Categories: Asset Class Management, Wealth Management
posted by Murray Round Wealth Management @ 17:33,
With profits bonds
Monday 23 June 2008
Some years ago The Financial Mail led an article about our warnings on with profits bonds. Since that time investors have still invested into these products as they are attractive for salespeople to sell. Clearly no relationship there between the quality of the investment and the adviser commission!!
However, it has been an on-going debate and we have joined it once again. Sylvia Morris of the Mail (click here for the full article) in her article stated…
“Hundreds of thousands of investors continue to suffer appalling returns on money trapped in with profits bonds from insurance companies. The worst of these bonds pays just 1.25% a year despite keeping your money for ten years. This compares with the 7%-plus being paid for no-risk saving on the High Street”
We are mentioned in the article stating… Nic Round, of IFA Murray Round, says: "With-profits are opaque and you don't have a clue as to where your money is invested. There are better alternatives around."
Clearly there are still thousands of investors who have not reviewed these plans. But when you do, try not to jump from the frying pan into the fire.
I recall an insurance product provider…who should remain nameless, has been looking to promote their own range of managed life assurance bonds which are dressed up to look attractive for anyone looking to exit from with profits bonds. In fact, they have a dedicated web site for financial advisers to build information on the with profits bonds in the hope instead investors will buy a new policy. Whether these are in investors' best interests I very much doubt, so if you have a with profts bond think very carefully about your next investment before exiting from your existing one.
Categories: Asset Class Management, Research, Risk
posted by Murray Round Wealth Management @ 14:17,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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