Archive for September, 2013

First State AA-rated Asia star nets £1.3m first half performance bonus

First State AA-rated Asia star nets £1.3m first half performance bonus

David Gait (pictured), a Citywire AA-rated manager at First State, has accrued a performance fee worth £1.3 million after a strong start to the year for the £197 million Pacific Assets Trust .

As well as an annual management fee of 0.75% on the fund, First State is entitled to a performance fee worth 12.5% of returns after a 1.75% hurdle over the MSCI All Country Asia ex Japan index, measured over a rolling three-year period.

Through the six months ended 31 July 2013, Pacific Assets returned 6.9% on a net asset basis and 12.3% on a share-price basis thanks to the narrowing of its discount. The fund’s benchmark lost 1.1%.

This significant outperformance has contributed to First State amassing a potential bonus of £1.3 million for the latest three-year period, more than double the performance fee of £627,000 it generated in the full year to 31 January 2013.

The fee will become payable in January provided the fund remains sufficiently ahead of its benchmark on the three-year view.

The trust’s board has capped the total fees payable at 1.75% a year; based on the figures for the past six months, its current expenses stand at 1.15%.


Monday, September 30th, 2013 EN No Comments

Changing times

Wealth management has taken on a new immediacy in the past year for same-sex couples following a series of watershed events. Last December, the state of Maine recognized same-sex marriages. This June, the Supreme Court struck down a key provision of the Defense of Marriage Act, known as DOMA, thus allowing federal benefits for same-sex couples who are legally married. And most recently, in late August, the Internal Revenue Service ruled that same-sex couples who are legally married will be treated as married for federal tax purposes, regardless of whether they live in a state that recognizes their marriages.

All those changes are creating opportunities for wealth managers, who are targeting a new customer base that previously had more limited choices in planning their financial future, and who now need professional help to sort through the changes in their legal status and their options.

RBC Wealth Management, Credit Suisse, U.S. Trust and others are honing their skills to take on same-sex couples, with some even offering special training to staff to be cognizant of relationship-specific considerations. The services they’re offering range from advice on basic budgeting and merging bank accounts to joint filing of tax returns and estate planning as well as establishing a durable power of attorney. Same-sex marriage is now legal in 13 states and the District of Columbia. Another 10 states are expected to join them, according to NBC News and the advocacy group Freedom to Marry.

“It opened a new can of worms, with [more than 1,100] different rights and responsibilities in the federal code tied to marital status,” says Liz Winfield, a financial adviser with RBC Wealth Management in Portland, about federal recognition of same-sex marriage. “If you get married, you need to talk about how to interact with money. But people would rather clean their oven with their tongue before talking about a budget.”

RBC doesn’t offer specific financial packages for same-sex couples, but Winfield says the same guidance for different-sex couples can apply.

“DOMA changed a lot of issues that had to do with there being no recognition,” says Mary-Anne Martell, owner and senior legal counsel at Seacoast Law, a Westbrook firm that offers estate planning and other services. “The rules applied to heterosexuals, not to same-sex couples, so they had to jump through extra hoops. They had no legal standing.”

Winfield experienced that personally. She married her partner, Alice, in 2006 in Montreal (Maine recognized the marriage under a reciprocal relationship with Canada), and says that until the recent DOMA repeal, her mother was her legal next of kin.

“So we did everything we could [before that] to protect our rights as if we were [recognized as] married,” she says.

“Whether married or not, Alice and I owned a house. We made sure the deed was in both names, the mortgage was in both names, and we got powers of attorney to cover finance and health and the legal right to speak for one another, as well as health care proxies, living wills and wills. We got every document we could get. These are things people who aren’t married, gay or straight, [still] need to do if they’re in a committed relationship.”

One example is that if a same-sex couple owned property and one passed away, the transfer of ownership was taxed before the recent changes.

“Some same-sex couples are together for 20 years and can’t discuss their relationship with their families,” says Martell. “It’s a hell of a mess when one of them passes.”

But like marriage, the rights and responsibilities now open to same-sex couples require taking the good with the bad. Martell says she has friends who are Maine residents, but who married in Massachusetts and were unable to get a divorce in Maine until the state recognized gay marriage.

“So clients who want to get divorced are now seeing spousal support and division of assets,” says Martell. “It applies to you now, for good and bad.”

A new way of thinking

For many recently married same-sex couples, such considerations are new. Chris Fleuriel, 62, a medical librarian who lives in Brunswick, and her partner, are clients of Winfield who married just 11 days before DOMA was struck down. Before marrying, Fleuriel did her financial planning by herself, mainly in the form of tax-sheltered annuities. She’s now looking for better ways to invest that money, and wants to talk to Winfield about topics such as what merging finances with her partner would mean.

“We haven’t discussed a lot about wealth management,” Fleuriel says about her partner. “Since we’re married, she’s now a beneficiary on my retirement accounts. Before that, it was just my children.”

She says she has not yet considered looking over her last three years’ tax returns to see if there is any money to recoup if she refiles as a married person. Domestic partners have paid extra income tax in the past if one partner received health insurance through the other, and they weren’t able to take the marriage deduction, so some couples might benefit from refiling jointly. It still isn’t clear how many years the IRS will allow for refiling.

Fleuriel advises others in her position not to take too long before thinking about their financial future.

“This is an area where financial planners and people like that should be able to get an uptick in their business,” she says.

Fellow newlywed Andy Verzosa, 50, who owns Aucocisco Galleries in Portland, agrees.

“Savvy companies are doing this, if they haven’t already started,” he says of wealth planners seeking same-sex couples as clients.

“Your relationship wasn’t recognized in society, so legally it wasn’t something to think about. Now that has changed,” he says of financial planning. “Not only can you think about it, you’re almost compelled to do so.”

Verzosa, who is in a 16-year relationship, married his husband in August and says he is thinking differently now about the future. But he says he still is learning the basics like what it will be like to file taxes together for the first time. He’s meeting a bookkeeper soon, and plans to hire a wealth manager.

“You don’t hear a lot of examples of how same-sex couples do retirement,” says Verzosa, who expects to pay off the mortgage on his vacation home this year. Before the DOMA change, he had considered either retiring in the property or selling it and living off the proceeds.

“I’m questioning whether to sell my seasonal home and putting those assets in other investment vehicles,” he says. “It could be a significant amount of capital to invest for retirement.”

A growing market

The wealth management field includes financial planners, certified public accountants, estate planning attorneys and others who advise clients how to best manage their money, typically with goals like retirement in mind. More than one such professional might be needed, depending on the client’s needs, Winfield says. While the term “wealth management” can connote high-net-worth individuals who have at least $1 million to invest, it also can mean the kind of financial planning done by people with only hundreds or thousands of dollars to invest in an individual retirement account or other investment vehicle.

The idea is building wealth over time, says Winfield.

And while there is only anecdotal evidence that more same-sex couples will seek financial advice, a 2009 study by the Williams Institute at the University of California in Los Angeles predicted by extending marriage rights to same-sex couples, those couples could boost Maine’s economy by $60 million over three years, generating $3.6 million in state and local government tax and fee revenues. Most of that was attributed to tourism and weddings, while there was no break out of other services such as financial planning. The study assumed that half of Maine’s 4,644 same-sex couples would marry in the first three years they were allowed to do so, and that 15,657 couples from other states would come to Maine to marry.

A more recent Pew Research Center study estimated at least 428 same-sex marriages in Maine (2012-2013) and more than 71,000 nationwide out of a total of 2 million U.S. marriages listed by the U.S. Centers for Disease Control and Prevention.

Retirement is the top concern among the lesbian, gay, bisexual and transgender, or LGBT, community, according to a study released last fall by Prudential. Some 78% of the survey’s participants said they already were saving for retirement. “Like most Americans, the LGBT community has a significant confidence gap in whether they will have enough money to last a lifetime. Retirement planning will be among the major financial issues facing the community over the next decade,” the report notes.

Still, LGBT Americans are less confident in financial planning than the general population because their finances, as well as tax, retirement and estate planning, have been complicated by the intricacy of tax and family laws affecting them. “Many indicate they need help with financial and estate planning,” according to the study.

Indeed, same-sex couples now face the same types of financial decisions previously in the realm of different-sex couples, explains Martell of Seacoast Law. “My clients never had to deal with this before, because they didn’t think they could get married.”

Martell says 56% of her clientele is gay and has come to her mostly through referrals.

“People want to deal with professionals who are understanding, empathetic and get it,” she says, adding there still is some stigma attached with being gay.

A number of financial companies have established services specifically with same-sex couples in mind, among them Credit Suisse and Bank of America, which has two units that focus on wealth management, U.S. Trust and Merrill Lynch.

“We have an organizational LGBT initiative and materials to educate our staff to be sensitive to those clients,” says Michael McCarthy, managing director and trust fiduciary executive at U.S. Trust in Los Angeles. The initiative was started about three years ago.

McCarthy says the staff goes through an education program that teaches them to be sensitive to the client and to the way in which they refer to themselves and their partners, as well as how open they are about their relationship.

“LGBT clients are underserved in financial wealth management issues,” he adds.

He says same-sex couples are now reviewing their estate plans and preparing documents such as a durable power of attorney for health care and for finances, Health Insurance Portability and Accountability Act access to medical records, hospital visitation prior authorization and paperwork on the disposition of remains.

“The state in which you die governs who has control over your body and the funeral arrangements,” he explains. “You need documents in place that to the greatest extent possible protect you as a couple.”


Monday, September 30th, 2013 EN No Comments

First Gulf Bank hosts First Wealth Investment Conference 2013

Guest speakers included Alex W. Peters, Vice President, Research Analyst and Portfolio Manager with Franklin Equity Group, Alan Wilde, Head of Fixed Income and Currency at Barings Asset Management, Guido Veul, CFA, Client Portfolio Manager-Equities in ING IM, Henrietta Lance, Senior Portfolio Manager – Global Resources Equities in Amundi Funds and Michael Wooley, Portfolio Specialist, Japan Equities in Eastspring Investments.

“Our operations have always been centered around our customers and on providing them with innovative financial solutions to suit their respective needs. We ensure that we incorporate the principles of specialisation, synergy and speed to everything we do. Our expansion plans over the coming period will not be limited to geographical locations but to also growing our existing operations across of our businesses, including our ‘First Wealth’ services. It is important to remain up-to-date on new market opportunities to ensure that we provide our customers’ with the best advisory platforms,” Huda Abdulla, Head of Emirati Segment and Distribution – Consumer Banking said.

Key themes for ‘First Wealth’s’ activities moving forward will be focused on Global Fixed Income Equities, US Investment Landscape, Japanese Equities, Global Resources Sectors.


Monday, September 30th, 2013 EN No Comments

The sentiment continues to be quite cautious: Sriram Iyer

It has been an eventful month for the global markets. With the US Federal Reserve’s tapering plans for bond-buying programme delayed, emerging markets breathed a sigh of relief.

Sriram Iyer, chief business officer, Religare Macquire Wealth Management (to be renamed Religare Private wealth management) talks to Ujjval Jauhari on the road ahead for the markets, his interpretation of the recent moves by the Reserve Bank of India (RBI) and the possible investment avenues for retail investors. Edited excerpts:
What are the key concerns of foreign investors when it comes to investing in India?
The concerns of foreign investors are twofold – the impending general elections and associated uncertainty/possible populist measures; and the twin deficits – fiscal and current (CAD). Foreign investors are also driven by their Emerging Market – India allocation and a lot of what they will do is a function of US Fed measures.
The surprise announcement by the fed in its recent FOMC meeting to hold back any cuts in its bond buying program has allayed short-term concerns of money being pulled out from the Indian markets.
What approach foreign investors are likely to adopt when it comes to investing in capital markets in India?
The foreign investors and non-resident Indians (NRIs) definitely have got impacted – at least from a sentimental perspective – because severity of losses they have suffered due to rupee depreciation.

So the investments or fresh allocation in the capital markets from them is going to take a long time.

Some of the larger Institutional investors, however, may decide to cut losses and square-off their positions, but NRIs tend to stay invested given their emotional connect albeit getting far more cautious and selective when allocating to the Indian markets.
What is the approach and advice for investment in equity funds?
There are Interesting ideas in equities as many stocks are near lows. Our idea on the ‘wellness’ portfolio theme has done well given almost 14% return.

From a fund perspective, there are a few funds that we are advising allocation in ideas that take advantage of volatility and dynamically manage allocations between cash/debt and equity.

We believe that such funds will offer an alpha in these volatile times. The core philosophy of Asset allocation and measure allocation in Equity through a staggered approach is something that will not change.
However Sentiment continues to be quite cautious. In terms of EPS (earnings per share) growth the things are not going to change overnight. Cost of capital remains high, inflations continue not to be very low.

Nevertheless, there are positive signs on CAD and the sentiments have improved quite a bit in last few days. RBI’s recent surprise hike in repo rate caught markets by surprise resulting in reversal of rally.
With the interest rates on a rise do you see debt funds being an ideal option?
Debt remains attractive and also fixed maturity plans (FMPs) are being looked at as interesting option. But I would suggest not locking investible money in these funds. Locking money for longer time will mean that you may have to forego other opportunities that may come your way in coming days.

There are number of open ended products where you can invest which may give you similar returns. So, one can opt for the liquidity option available even if the yields may be a few basis points lower.
What is your opinion towards Gilt funds?
Gilt funds as products are fundamentally risky in such volatile environments. Given that the long-term average of 10-year paper is in the region of 7.5%, there is a fair chance that investors will make capital gains over a 12-18 month period provided the deficit/inflation situation doesn’t deteriorate.
However, in the interim investors will need to stomach some serious volatility as evidenced in the last few weeks with yields swinging wildly and having an impact on clients exposed to funds with longer durations.
How about Gold funds?
In the long-term, how Gold prices will behave is dependent on multiple factors that cannot be predicted. Hence, I would recommend only some amount of allocation to Gold, say 5-8% of your overall allocation.
How should investors allocate their investments in current scenario?
Depending upon the risk appetite, investors can invest in ‘Protection’ assets where their capital will be always protected but liquidity will be low. They can invest in ‘Growth’ assets where there will be higher growth though the capital may not be protected. Also ‘Aspirational’ assets can be looked at from a long-term prospective.
How do you plan to proceed after Macquarie’s planning to exit the joint venture?
Macquire had its own priorities and last year they had sold their Asia Private banking Business but in India they were continuing in the joint-venture. Now they decided to focus their efforts towards Australia.

This presented a fantastic opportunity to Religare who decided to take full ownership of the business thus endorsing the advisory led model that we have created in this business.
Wealth management business functions very well when it is able to leverage other capabilities that are available from the same group. 

Our business is a part of the group which has NBFC’s, securities, insurance and the capital markets platform. This gives us access to all the capabilities than we can utilise to add significant value to our clients.


Sunday, September 29th, 2013 EN No Comments

Managing mega-wealth, family style

Oprah’s got one. Bill Gates, Mayor Michael Bloomberg and George Soros reportedly have them, too. Live in an oceanfront estate in town and you’ve probably got one as well: not Bentleys but family offices.

“Defining a family office is complicated,” says Michael J. Bracci managing director of Northern Trust. “The term means so many different things and comes in a variety of structures. But, at its core, a family office is a financial operation that handles a family’s wealth.”

With more ultra-high-net-worth individuals than ever, including 480 billionaires in the United States and 28 of the Forbes 400 in Palm Beach, the number of family offices is growing.

But getting details about a family office, whether it’s overseen by a wealth management institution, independently or as a multi-family office, isn’t easy.

Family office boom

Although estimates put the number of family offices in the United States at 3,000, there probably are more — and that figure is likely to swell in the years ahead as individual fortunes rise.

Regardless, you can bank on two things: no two are exactly alike and there’s more to a family office than a surname.

The notion of working with a fiduciary was spawned centuries ago when wealthy merchants hired advisers to control their wealth while they traveled. More recently, the Rockefeller name is credited with creating the family office more than 100 years ago. Families such as the Morgans and Phippses followed, and this exclusive wealth-management style caught on.

These ultra-high net worth individuals found they needed a way to manage their family fortunes and secure the future of their wealth. To do so, they hired full-time employees such as investment professionals, accountants and attorneys. The same strategies are basically followed today.

Originally, the first family offices did just that — represented the needs of one family. Today, the family office comes in two basic formats: the single-family office, or SFO, and multi-family office, MFO.

No matter the structure, the family’s needs come first. Issues addressed include financial, tax, estate and succession planning, trust management, legal, educational, and philanthropic services. Or it can simply be bill paying, handholding and decision-making advice about whether the family needs a mega-yacht or a Gulfstream G550.

No chump change will do in this arena. In fact, those with less than $25 million in investable assets — that’s not total net assets but investable ones — had best look elsewhere for their high-end money-management needs.

Family styles

Once the decision is made to create a family office, be it a SFO or MFO, its success begins with family honesty.

Helen Bernstein, Palm Beach resident and author, has had a single-family office for years. “One of the reasons I have a family office is I don’t know anything about business, mathematics or anything like that,” she says. “So I’m not good at any of that stuff and the older I get, I’m less good.”

Bernstein — whose new book, My Journey From Palm Beach Journalist to Oprah with Stops Along the Way, will be available later this month — has always had her son manage the office.

As in most single-family offices, the investment and administrative work requires more than one employee. Bernstein’s office has three.

A study by the Wharton School of the University of Pennsylvania found that the average single-family office employed eight people, with 43 percent headed by a family member. Operating costs can run from hundreds of thousands of dollars a year into the millions.

According to Bracci, single-family offices are sometimes formed as corporations, LLCs or S corporations.

Enter the MFO

“Usually, it doesn’t make financial sense for a family with liquid wealth less than $75 million to start and staff a single family office as it is a huge investment both in time and money,” says Michael Montgomery, managing director at CTC Consulting, Harris myCFO.

Christopher Kelly, founder and managing director of Barclay Breland Family Office, agrees: “Typically, someone who wants their own single-family office wants total control over everything, from their name on the door to working 40 hours a week.”

But they’re expensive and time-consuming to run, Kelly says.

Hence, the growing appeal of the multi-family office.

Bessemer Trust began as a private family office for the Phipps family in 1907. It has grown into a large multi-family office serving 220 families with significant wealth.

Brandon Reid, managing and regional director of Bessemer Trust, sees the benefits of a multi-family office for the wealthy like this: “What’s the alternative? You create a multi-family office or you try to provide all the services to yourself.”

It makes sense, he says.

“In addition to the brokerage, planning and investment management pieces, if you have $100 million, have children and grandchildren, and you’d like to oversee everything from the multiple houses you own in Palm Beach, The Hamptons and Europe, have an airplane, etc., family offices in general take care of the overall management of these things.”


Those with family offices face a variety of annual fees and expenses. These depend upon the firm they’re working with, their total assets, product choices they’ve invested in, and the services they require.

Fees and expenses also can be confusing and aren’t always transparent, particularly on proprietary products, mutual funds and tax preparation.

“One of the biggest problems that we’ve seen in the industry is that people don’t understand all of the fees they are being charged for their family office,” Kelly says. “We do an extensive forensic fee analysis on every one of our clients so that they know exactly how much they are paying.”

At Bessemer Trust, fees are predicated on assets under management. “It’s around 1 percent, “ says Reid. “But it could be a little bit less or a bit more, depending upon the scale of the client. As they have more capital with us, the fees go progressively lower.”

Relationships and family

Deciding whether to create a family office boils down to this question: How much time, money and control do you want?

Choose to be a part of a multi-family office and you’ll likely be entering into a long-term personal relationship thatprobably will see your family from one generation into the next and beyond.

“Because this will be a long-term relationship, potentially lifelong, it is imperative that we take as much time as we need to ensure this is a good fit for the client and for us,” says Montgomery. “It’s also very beneficial for us to understand the complex emotional underpinnings of the families.”

That said, once a relationship is established, it’s not unusual for professional relationships to turn personal.

“At the end of the day, you get to be friends with the people (you’re working with) as the years go by, “ says Reid. “I’ve got clients who go back 30 years. We vacation together. They stay at my house. I stay at theirs. What really makes it are the relationships you build.”


Sunday, September 29th, 2013 EN No Comments

People in business for Sept. 29


GEC Inc. has named Shelton Perry as vice president, U.S. Army Corps of Engineers marketing and execution, responsible for expanding GEC’s corporate-wide strategy for doing business with the corps. Perry was program director, economics.

Horizon Wealth Management has named Brooke Gautreau and Andy Bush to partner.

Gautreau heads the professional administration team and serves in business management and strategic planning roles for the company. Bush serves as a personal financial advisor and heads the firm’s retirement plan services division.

Karen I. Boss has been named vice president and retail market manager at Red River Bank in Baton Rouge. She was a retail branch manager for JPMorgan Chase.

Cajun Industries LLC has named Jessica Rockenbough as corporate controller and Kelly Phillips and Joelle Patty as company controllers for Cajun Industries’ subsidiaries.

Rockenbough was internal audit manager. Phillips was controller and Patty was assistant controller.

Christy Marino has been named director of association management and special projects in the new Baton Rouge office of Lafayette-based Centanni Communications LLC.


Bruce J. Richards, director of planning, has been named a vice president at N-Y Associates Inc., Engineers, Architects, Planners Program Managers in Metairie.

Jonathan Buff has been named general manager for Hawthorne Global Aviation Services’ New Orleans Lakefront Airport fixed-base operator. He was a FBO development strategic advisor for The 500 Group Ltd.

Rebecca Sequeira has been named private wealth manager at Champion Wealth Strategies’ newly opened Mandeville office. She previously was vice president and private client advisor for Whitney Bank, First Commerce Corp. and First Bank Trust.


Jake Delhomme has been appointed to the board of directors of MidSouth Bank. Delhomme, a retired NFL quarterback, has served as an advisory board member since May 2012 and is a member of the director’s loan committee. He, along with his brother and father, raise and train thoroughbred race horses.


Sunday, September 29th, 2013 EN No Comments

IT jobs ‘not ruled out’ of Barclays Wealth redundancies

IT jobs are at risk of redundancy after Barclays announced plans to close its wealth management services in 130 countries by 2016.

The bank said that it is going through a consultation process and the final number of jobs affected will not be known until it is completed. The wealth management division employs around 8,000 staff.

A spokesperson for the bank said: “The exact nature [of jobs] is to be confirmed, but we can’t rule [IT job losses] out.”

Barclays also told Reuters that technology, as well as the restructuring, would lead to job cuts.

The bank announced its plans to restructure the wealth division, in April, in order work more closely with its retail and corporate banking departments.

Peter Horrell, CEO of Barclays wealth and investment management, said that “reducing complexity” in its business would enable it to “focus on bringing the right services and products to clients in locations where we have scale”.

“We are investing in the business in order to reinforce our position as a centre of excellence for high net-worth banking, research and investments and the online execution-only space, which we see as a battleground of the future and where we have significant advantages.”

The bank has changed its tune since three years ago, when the wealth management division announced a five-year plan to spend £230 million on upgrading its IT and infrastructure. The division is also spent £120 million on several hundred new client-facing staff.


Saturday, September 28th, 2013 EN No Comments

PAM Insight Hosted a Successful Dinner for Private Client Wealth Management …

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table settings at the Goring

The Archive Room at the Goring

We had such an amazing response to this event, in its first year.

London, UK (PRWEB UK) 28 September 2013

On 17 September 2013, Wendy Marston Events organised a successful dinner for senior executives of leading private client wealth management firms, on behalf of PAM Insight.

The purpose of the dinner is to bring together senior wealth management executives to discuss the items at the top of their agendas looking ahead to 2014. Attendance included CEOs, Chairpersons, Senior Partners and Managing Directors from leading private wealth managers, including Coutts, Sarasin Partners Rothschild. PAM Insight consulted with a number of CEOs to identify the key issues and put together 4 speakers to give their thoughts on tackling the key points. The Goring, London, provided a reception and light dinner (4 small courses) in their Archive Room.

Feedback from the event has been positive, the schedule ran smoothly and the speech and QA sessions provided useful insights into the key industry issues. Articles covering the discussions, including regulation, mergers acquisitions, client trust, and private equity, are available to subscribers on thewealthnet.

“We had such an amazing response to this event, in its first year. PAM Insight is really taking a leading role in creating opportunities for dialogue within this community, and it is exciting to be able to support them in their endeavours,” said managing director, Wendy Marston.

Wendy Marston Events is a specialist event planner, focusing on the organisation of awards programmes and their associated receptions, dinners and meetings, from small roundtable breakfast meetings to gala award dinners. Wendy Marston, founder and director, has been managing the PAM Insight’s suite of awards and specialist industry dinners for over 10 years.

Companies interested in improving the return on their events and awards programmes can contact Wendy Marston at Wendy Marston Events.

About Wendy Marston Events:

Wendy has been running events for business since 2001 and weddings and private events since 2008. Wendy Marston Events specialises in running award programmes, receptions, dinners and meetings, from small roundtable breakfast meetings to gala award dinners.

For further information contact Wendy Marston

Email: wendy(at)wendymarstonevents(dot)com


Phone: +44 (0)7971 203725

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Saturday, September 28th, 2013 EN No Comments

The Future of Financial Advice



Saturday, September 28th, 2013 EN No Comments

Why has Aberdeen All Asia confounded Hugh Young to turn Japanese?

Why has Aberdeen All Asia confounded Hugh Young to turn Japanese?

Japan has no shortage of bears, and one of the biggest has long been Hugh Young.

Since starting at Aberdeen Asset Management in the 1980s, the man who is now its group head of equities has always been underweight Japan.

Back then, Japan represented 80% of his Asia Pacific benchmark, but Young (pictured) allocated less than 20% to the country. That looked eminently sensible as the Nikkei lost three-quarters of its value between 1990 and last summer.

But then came prime minister Shinzo Abe, and a 70% surge in the market in yen terms – which Aberdeen largely missed. Its principal Japan fund, the £400 million Japan Growth unit trust run by Citywire A-rated Chern-Yeh Kwok, has been a bottom-decile performer over the past year, with sterling investors receiving a total return of 18% compared to the peer group’s average of 27%.

In contrast, Japan Growth is top decile on a five-year view, generating 53% to the sector’s 32%.

The reason for that vertiginous slide down the rankings is not hard to discern: Aberdeen prides itself on being a long-term investor that eschews the jetsam that floats higher in a rising market.

It is worth noting, for example, that typical beneficiaries of the spike have been groups such as Tokyo Electric Power, the utility hit by the Fukushima nuclear disaster yet up 300% in the euphoric rerating over the past year.

So what to make of Aberdeen’s recent proposal to change its Aberdeen All Asia Investment Trust into the Aberdeen Japan Investment Trust? Subject to shareholder approval, it too will be helmed by Kwok and a rights issue will aim to swell it from a market capitalisation of £51 million to £150 million.

There are a number of inducements in the terms. The fixed 0.75% annual charge plus 15% performance fee will be dropped, replaced by a tiered structure of 0.95% on assets up to £50 million and 0.75% beyond that.

Unlike other Japan funds, yen exposure would be sterling hedged; competitors have lost a large portion of recent local gains for lack of such currency insurance, although obviously that could work the other way in the future. And the increased size should make the trust more liquid, an important consideration given its current average traded daily volume is less than half that of comparable trusts.


Friday, September 27th, 2013 EN No Comments