After the carnage of the past two years - wreaked on expatriates'
savings and pension values - and the possibility of much greater declines
in stock prices, aggrieved private investors must beware of an over-reaction.
They are an easy target for all sorts of moonshiners promising unique schemes
to raise their level of returns and recoup losses.
After the carnage of the past two years - wreaked on expatriates' savings
and pension values - and the possibility of much greater declines in stock
prices, aggrieved private investors must beware of an over-reaction. They
are an easy target for all sorts of moonshiners promising unique schemes
to raise their level of returns and recoup losses.
Everything should be examined very carefully and one should deal only
with the most reputable of institutions with verifiable track records.
Under this category, I do not include the British life companies who have
happily been milking the innocent for too long. Did you see your charges
diminishing at the same pace as the returns?
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Facing reality
So, what to do? There are innumerable possibilities and not all of them
can be discussed in the scope of a general article. Signs of an economic
global recovery will eventually emerge, but one thing is for sure: we are
entering a period of slower growth than the roaring 90's. The level of
corporate profits will probably not be exciting in the medium term and
therefore neither will the market bounce. Long-only funds - and those are
nearly all the funds operated and punted by the usual brokers and life
institutions - will thus take a long time to recover as they are dependant
on a continued upward movement in share prices. Absolute gains over the
next ten years are by no means a certainty. And all the while, fund charges
and investment 'vehicle' charges are eating away at what little return
may be achieved.
Assessing the alternatives
Each person's investment situation will be as varied as the funds they
were 'allocated'. Every situation now needs individual, close attention
and a full discussion of possible strategies to ensure future capital protection
and growth. There is no panacea and some medicine will be unpleasant to
take. But to ignore the possible disease in your capital fund is potentially
more disastrous. A full cost/benefit analysis of your existing situation
and alternative strategies is essential.
The extreme possibilities include staying where you are in anticipation
of a general and substantial recovery, and paying the charges. Or liquidating
now and seeking a structured solution that offers direct entry, transparent
fund charges and absolute return strategies.
Anthony Purkis of Strategic
Investment Advisers with wife Kanya and daughter Andessa, outside their
home in Chiangmai
A.nthony Purkis
was born and educated in the UK, after living for 7 years in Malaysia as
a young child Working since 1987 as a consultant, Anthony has run his own
firm in the UK and has worked for leading investor relations companies
and a major banking group. He has been an expatriate for 10 years and came
to live in Thailand with his Thai wife and 3 yearold daughter in March
2001, although his happy association with this country goes back to 1994.*
After brief experiences with expatriate investment consultancies in Thailand
and Kuala Lumpur, Anthony decided to work outside the insurance company
investment regime and to focus on more results-driven areas of personal
finance. On the retail side, Strategic Investment Advisers specialises
in analysing alternative investment funds, drawing on Anthony's past futures
trading and capital markets experience.
Just switching to bonds is not the solution, either. One of the most
cynical investments I have ever seen was made by an accredited broker into
a guaranteed bond fund run by an Isle of Man household name insurance company.
The investor had been sold security and a guaranteed return. But his return
was minimal, due to broker commission and institutional charges. The bond
fund was returning around 6% but the investor got closer to 2 %. Now equity
returns are low to negative, a similar vanishing trick could well be seen
on those funds.
Take charge yourself
The best advice I can offer someone for the future can be summarised
as 'active capital management': deal as directly as possible, at the lowest
access cost, in accord with your risk profile. In practice that means allocating
your money in a way that makes you comfortable, with professional help
on fund selection and portfolio structuring. You must demand to know the
alternatives, how they work and what they cost. This can be done on a one-off
consultation basis with the right minded and knowledgeable - those who
are not solely driven by commission, and with hidden ties to particular
institutions and dog funds.
Anthony
G.Purkis
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