Poacher turned gamekeeper…
Wednesday 27 May 2009
…or it takes a thief to catch a thief is another expression!…but the meaning is when someone has specialist knowledge which can then be used by another.
I was interested to see comments made in the FT by Edward Hocknell, a senior partner at Baillie Gifford.
Firstly he said “The financial services industry has gone completely bananas in the past few years," says Mr Hocknell. He blames excessive remuneration and “believes performance-related bonuses turn fund managers into divas.”
He says: "We don't pay people huge annual bonuses. It's a terrible thing for fund managers. If they've had a fantastic year, they already think they're very much cleverer than they really are, so if you give them a bonus on top of that, they think they're masters of the universe. Conversely, if they've had a bad year, they get depressed, so giving them a small bonus makes them even more depressed”
Mr Hocknell is also critical of remuneration structures on an industry level. He labels hedge funds and private equity fees "ridiculous".
"It's called financial services, but there's a big question as to what service we're providing at that price. If you're taking that much money out in fees annually, there's no way there's any money left for clients at the end. It's not that people are terribly wicked, but our industry got so complicated and there were so many layers that the ultimate beneficiaries were forgotten."
Such an article in the FT does not warrant front page news and with so much news, these comments often get lost in a sea of words. Yet the words are endemic of so many fund management groups.
He is saying they are overpriced. I agree. In fact investors should not accept these charges and vote with their feet..NOW.
Most of all these fund managers have lost sight of who they service. That is you, the investor.
If you have investments, ISA, pensions etc, you will employ fund managers. Have you thought of asking the fund manager who manages your money, how they are remunerated? The chances are they will be incentivised through bonuses. Now look again above and see what Mr Hocknell makes of the bonus culture.
It is in the interests of every investor to establish how their funds are managed, what are the risks, what are the costs and how the managers are paid. They may say they are serving you but as Mr Hocknell says… “..our industry got so complicated and there were so many layers that the ultimate beneficiaries were forgotten."
Of course you can take no action, yet remember, in the words of Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, who said “you cannot decide at the end of this life that you need to save more in the next one”. It is important to review your investments NOW.
posted by Murray Round Wealth Management @ 16:16,
The Alpha Beta Cautious Growth High Income Target Neutral Fund..
Thursday 21 May 2009
As far as I am aware, there is no such fund as the "The Alpha Beta Cautious Growth High Income Target Neutral Fund" but my point is that fund names can be strange.
Take this one “The JPMorgan Highbridge Statistical Market Neutral Fund”
If it sounds complicated, is that meant to impress investors?
There has been, in our view, too much over complication in financial products which means investors perhaps should go back to basics and invest in things they understand.
Maybe buy the fund that does what it says on the tin…providing you understand the contents.
In a recent blog about fund closures (here), it’s a timely reminder that not all funds have longevity. Is the strategy of the fund you are buying relevant for your investing future? I know it is difficult to decide but if you are taking a chance of buying a fund, perhaps with an esoteric name, (and I am not suggesting that the name of a fund is any reason to buy or not buy a fund) you need more of a return to compensate for the risk of closure. Now, is it worth the risk if the fund may not have the life span you expect?
posted by Murray Round Wealth Management @ 15:55,
Fund closures at record level
Monday 18 May 2009
Asset management companies are closing or merging funds at an unprecedented rate as they scramble to bring costs into line with falling assets and revenues.
In Steve Johnson article on April 12 he says that “According to figures from Morningstar, 1,439 fund classes were liquidated or merged across Europe and Asia in the first quarter of 2009, a 61.5 per cent increase on the same period in 2008.”
As an investor, what is the possibility or likelihood of you holding funds that are closing? How does it affect you? Does it matter if they are closing or not?
Perhaps the words of Christopher Traulsen might help...
“Investors can end up in a fund they didn’t want to be in,” said Mr Traulsen (Director of fund research for Morningstar Europe and Asia). “When things happen it’s usually in the interest of the fund company and these interests very often, if not always, conflict with the interests of fund investors.”
So investors watch out…the people you are asking to manage your money could be in conflict with you!
It is important to review your investments and if you get notification of fund mergers or closures, take the opportunity to rethink what action you really should take.
posted by Murray Round Wealth Management @ 15:58,
Perspective…it’s fascinating to discuss until it is obvious.
Thursday 14 May 2009
There is a sense of outrage on MPs that has been exposed by the Telegraph regarding expenses.
Yet if you add up the costs of these claims and divide by the number of taxpayers, in real terms, it is almost zero. As one MP said, there is a lack of transparency. So whilst the cost to each of us individually is minimal, it is the principles of integrity and honesty that grasp our attention and feed our emotions with distrust.
What has this to do with investments?
There is an unfortunate reversal of costs v transparency.
When you employ investment managers for your pension funds, ISA and investments, which are your savings for your future, the costs to each of us is high. The impact of costs is massive if you are not careful. To put these costs into perspective, over 25 years or more, the impact of costs can amount to over half of your fund! That means your future income from investments can be vastly reduced.
Yet rather than expose these costs as the Telegraph has done, which shows a lack of transparency, the information on retail investment management costs are actually fully available to the public. It is not a secret. Whilst it is clear many fund managers and advisers will not help you find this information as it would undermine their perceived value…remember the saying, a 'Turkey would not vote for Christmas', but it is nevertheless, available if you want to find out.
If you are outraged at the lack of integrity of MPs that in reality does not impact in any significant way on your individual net worth, maybe take that same outrage and direct it towards things that do have an impact on your future net worth. A sense of perspective ultimately may be better for your wealth.
posted by Murray Round Wealth Management @ 12:22,
Behind the scenes at Murray Round...
Tuesday 12 May 2009
In the world of advice, there are countless product providers looking to promote their investments. It is our responsibility to carry out diligence on behalf of our clients. In many circumstances our clients do not even hear about these products because they do not pass our due diligence process.
It is our job to shield our clients from inappropriate investments.
I often say to clients that the way to obtain a successful investment experience over time is not to make mistakes. That means not buying investments that are inappropriate, or perhaps selling at the wrong time, or following the next fad or as I heard, being a contrarian even (as someone said, if your house is on fire, you get out like everyone else!).
Yet advisers are faced with a barrage of products from insurance and investment providers, as such an advisory firm must have a thorough due diligence process to protect their clients from poor investments and by contrast, recommend excellent opportunities.
Some advisers use these so called new opportunities as product selling opportunities...be wary of new many new and exciting opportunities!
I wanted to post an example of the marketing from investment products providers but Regulation permits me from doing so, as it would illustrate what these product providers say to encourage advisers to sell their products.
My message is when you are looking at new investment opportunities, ask yourself, are you absolutely sure you understand the risks…and perhaps more poignant, be absolutely sure your adviser understands them. It's your money after all…
posted by Murray Round Wealth Management @ 16:07,
Wealthy put their faith in individuality
Monday 11 May 2009
A rising number of rich individuals are distancing themselves from private banks in search of more independent advice, favouring smaller wealth managers or boutiques to manage their money says Ruth Sullivan of the FT
“Clients are feeling the best advisers will be independent,” says Michael Maslinski, a director of Maslinski & Co, consultants to the wealth management sector. “There is an erosion of confidence in banks especially now they have invested in products they don’t understand.”
Having read this article I am not surprised, especially when more evidence shows that Banks are not really the people to talk to about your investments. According to Money Marketing “Barclays advisers at different branches across the country have been advising clients to cash in with-profit funds, bonds and other investments and put the lot into a single, high-risk unit trust. The advisers all chose the same unit trust in fact, which, incidentally, has high levels of trail commission.
The fund that was recommended by Barclays was the Aviva (formerly Morley) balanced global income fund. It is featured in the Investment Management Association’s specialist sector and invests in convertibles, call options, non-investment grade bonds and equities. The fund has seen huge losses of 45 per cent in the 12 months to March 2009.”
Is it any wonder then that investors are waking up to the banks selling of products and instead are seeking proper financial advice. Investors can then leave the banks to lending and saving. Horses for courses!
posted by Murray Round Wealth Management @ 16:00,
Hyde Park Asset Management...more down to earth than previous names!
Friday 8 May 2009
John Duffield is staging an comeback with the launch of his third investment group, Hyde Park Asset Management, from the shell of the recently imploded New Star says the Telegraph.
“When asked a few years ago what motivated him to keep working at New Star at his age, he answered: "I suppose it is just to prove that one is able to do whatever one is attempting to do - in my case build up another successful fund-management company. There is also an element of 'what else would I do?' I would go home, watch television and be dead in a year."
I find the words used interesting…what is the definition of a “successful fund management company?” Without doubt Duffield has made himself and some staff rich, but what about the investors money his company manages…has he been successful for them? I am reminded of the book "where are the customers yachts" Fred Schwed. Jr., Where Are the Customers’ Yachts? (1940)
An out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of the guides indicated some handsome ships riding at anchor. He said, “Look, those are the bankers’ and brokers’ yachts.” The naive customer asked: “Where are the customers’ yachts?”
There is nothing like the power of the good anecdote to focus the mind. Sometimes the anecdote is so striking that it comes to be a root metaphor, shorthand for some basic insight or understanding. The Customers’ Yachts story is just such anecdote. We laugh at the (supposedly) innocent question, “Where are the customers’ yachts?” because we know that the bankers and the brokers are supposed to be serving the needs of their customers and yet, surprise, the ones providing the service seem to get more out of the relationship than the served.
posted by Murray Round Wealth Management @ 16:02,
Sometimes the truth hurts...
Thursday 7 May 2009
One of the ways to deliver a message is through comedy. People laugh and its emotionally engaging..and sometimes a real message can come out of the fun.
Here is a clip by US comedian Jon Stewart. It is his take on CNBC's performance in the current credit crisis.
I hope you will enjoy. There is a bleep word at the end...and yes there is a real message when the laughter subsides.
So..what did you think?
The message shows that the media is interested in speculation not investing. Moreover these experts (I think speculators is a better word) are very rarely held to account and their views are never back tested. Listening to speculators can be entertaining, but certainly not how you make investment decisions.
Investing is different to speculation. Neither is it about entertainment. The destruction of wealth can ruin lives without any responsibility through speculation and not knowing what is or is not entertainment.
Investing is a very serious business.
Taking tips from TV or reading a newspaper …or listening to a friend says they have heard about a new opportunity…or even your financial adviser who explains the benefits of a new fund… a stockbroker who encourages you to buy the next Microsoft, whatever the input, you do need a decision making process in place to help you choose what action to take with the information you receive…
My question is therefore, what decision making process do you have in place?
How do you know if the information you receive is relevant to you? Is a tip really beneficial or not? How do you weigh up the risks? How do you measure the possible outcomes?
These are all important considerations, yet when we often ask this question of new clients, the answer we hear tends be ambiguous. The reason appears to be because no one has helped the investor develop a proper process initially. Why is that?
In truth, the reasons are because those delivering the tips or advice or recommendations have a bias. If there is a product that you are recommended to purchase, a bias will exist. As such, anyone prescribing such advice on products is not going to offer you adequate information to help you decide not to buy!
Wherever possible, you need to find out how the advice is promoted to you and if the adviser is not paid by you, are you really sure they will be acting in your interests…however nice and friendly they maybe.
We help you develop a thought process that allows better investment decision taking. It's one of the reasons why we are different and why that difference adds significant value.
Here is a clip by US comedian Jon Stewart. It is his take on CNBC's performance in the current credit crisis.
I hope you will enjoy. There is a bleep word at the end...and yes there is a real message when the laughter subsides.
| The Daily Show With Jon Stewart | M - Th 11p / 10c | |||
| CNBC Financial Advice | ||||
| ||||
So..what did you think?
The message shows that the media is interested in speculation not investing. Moreover these experts (I think speculators is a better word) are very rarely held to account and their views are never back tested. Listening to speculators can be entertaining, but certainly not how you make investment decisions.
Investing is different to speculation. Neither is it about entertainment. The destruction of wealth can ruin lives without any responsibility through speculation and not knowing what is or is not entertainment.
Investing is a very serious business.
Taking tips from TV or reading a newspaper …or listening to a friend says they have heard about a new opportunity…or even your financial adviser who explains the benefits of a new fund… a stockbroker who encourages you to buy the next Microsoft, whatever the input, you do need a decision making process in place to help you choose what action to take with the information you receive…
My question is therefore, what decision making process do you have in place?
How do you know if the information you receive is relevant to you? Is a tip really beneficial or not? How do you weigh up the risks? How do you measure the possible outcomes?
These are all important considerations, yet when we often ask this question of new clients, the answer we hear tends be ambiguous. The reason appears to be because no one has helped the investor develop a proper process initially. Why is that?
In truth, the reasons are because those delivering the tips or advice or recommendations have a bias. If there is a product that you are recommended to purchase, a bias will exist. As such, anyone prescribing such advice on products is not going to offer you adequate information to help you decide not to buy!
Wherever possible, you need to find out how the advice is promoted to you and if the adviser is not paid by you, are you really sure they will be acting in your interests…however nice and friendly they maybe.
We help you develop a thought process that allows better investment decision taking. It's one of the reasons why we are different and why that difference adds significant value.
Categories:Videos
posted by Murray Round Wealth Management @ 08:54,
Simplicity versus performance - can investors trust what they don't understand?
Tuesday 5 May 2009
Investors should be able to trust a complex fund as they do a high performance car, according to Tim Haywood, chief executive of Augustus Asset Managers which manages the Julius Baer Absolute Return Bond fund range among others.
Haywood argues that designing funds simple enough for lay investors to understand, like building a car suitable for weekend tinkerers, will have a negative impact on performance.
In theory, trusting the manager to deliver is important but how many fund managers actually have delivered to earn the trust they are asking for?
In reality few managers ever beat the market returns, that means investors are likely to be overpaying for a fund manager that does not consistently outperform. Anyone remember Bernie Madoff..he asked people to trust him...
In our view investments do not need to be complicated to be successful. If investment managers are keen to promote a sophisticated product, perhaps you should leave it for someone else to buy.
posted by Murray Round Wealth Management @ 15:59,
Whenever the US stock market goes up, the dollar goes down (relative to the Euro).
Friday 1 May 2009
I was interested to find these professors, Antonio Fatas and Ilian Mihov, views on the Global Economy in a blog called http://fatasmihov.blogspot.com/
The latest entry related to the correlation between the US stock market and the dollar. If you are interested, here is the link
It is interesting that according to Fatas, the correlation is not easy to explain with traditional macroeconomic models. He says “…to some this might not be a surprise given how bad some of our traditional macroeconomic models have helped us navigate through the current financial crisis!”
The point is that looking for signs that help decision making for world governments to help bring the world economy back on track is not easy. I suspect that over time, we may be able to look back and see signs or correlations or other factors that perhaps show a turning point, but at the time, these are very difficult to spot.
Relate this concept back to your wealth…whether its property, pensions, ISAs, etc…knowing when is the right time to reallocate by spotting what’s happening in the world is extraordinarily difficult. Yet most investors employ fund managers that attempt to do just that. If they get it right, it makes a significant difference to your return, but if they get it wrong, you suffer.
Rather than employ fund managers that add another level of risk that you cannot control or manage, there is enough empirical evidence that suggests adopting an investment philosophy that looks to capture market returns. Yes you have guessed, it’s what we do.
posted by Murray Round Wealth Management @ 11:07,
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.
Welcome to our Blog
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