Peter Spann 1 Day Investor Update
- Thread starter Cheeks
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Div Strat
It's a little more complex then that but, yes, you've got it basically.
It is a completely different strategy. When you put the two together we believe it adds substantially to the ability of the fund to produce income (it's desired activity) and lowers the overall risk.
jscott said:
It's a little more complex then that but, yes, you've got it basically.
jscott said:
It is a completely different strategy. When you put the two together we believe it adds substantially to the ability of the fund to produce income (it's desired activity) and lowers the overall risk.
Capital Protection
You and Y-Man basically answer this.
The primary reason is the "sleep at night" factor.
While, yes, people will commit to equity funds without capital protection, they are much more comfortable committing "significantly" to it with the capital guarantee in place.
Even though there is a perception that "everyday" investors now understand equities their behaviour indicates they do not.
Let’s step back for a second - most people, if they attempted to actively sell properties right now they acquired in the last few years would take a loss (and in most markets across Australia that could be as high as 30%) or sell at a breakeven or profit not substantial enough to justify the investment, but they seem very happy that their investment decision was “right”.
When it comes to shares our phones ring off the hook if one of our recommendations goes down even 5%. And if one of our recommendations fell as much as 30% (ie: the same amount I am saying they would lose if they actively sold their properties against their peak valuation) they would be screaming! So while they say they are comfortable with their decisions their behaviour indicates otherwise.
I have a running joke with Fund Managers (this will NOT be funny to anybody apart from people in the Financial Services industry so go to sleep now), when they ask me what the risk profile of our clients' is...
My answer is, "Very aggressive...
UNTIL they start losing money!"
Knowing that our recommendations to clients are affected by allocation and risk profile, in order to balance their portfolios (which is an essential element of my strategy) we would be required to recommend significant leverage (borrowing) to invest in equities to match their exposure to property.
Side bar - remember most people (because they think they understand property), have really got themselves over exposed to leverage - we still see clients with in excess of 90% LVR AND variable interest rates while our current recommendation (generally) is no more then 70% LVR and fixed interest rates (for as long a duration as possible when you consider my prediction that they will peak early to mid next decade).
While gearing up and staying variable in a rising market might be a clever strategy most of our clients (and I suggest most people in this forum) have not adjusted their strategy in light of new economic circumstances which have been evident in most areas now for 3 to 4 years (ie: a repressed housing market, a rising equities market, and an economic circumstance showing further rises in interest rates on the cards).
So in order to get them exposure to the rising equities market and match their exposure to their residential property allocation we would have to gear them to levels that I am VERY uncomfortable with given their risk profile and behaviour.
The capital protection allows the risk of the investment to be matched (at least in the long term – the duration of the investment) with the risk profile of our clients – good news number one, and, as long as they can afford and are comfortable with the interest payments, allows them to add significantly more leverage to start to address the imbalance in their portfolios – good news number two.
Having said all that you CAN invest in the fund without the capital protection but you get a much lower LVR (up to 70%) and I think you are over estimating what the capital protection costs. Remember this is an equities fund so they take a hedging approach (ie: they buy a put) not a actuarial approach (setting aside large swags of cash invested at the cash rate to offset a 100% loss situation). Hedging is a significantly cheaper approach to capital protection then most other approaches. It slightly increases the risk to the provider (in that they have to actively manage the position) but in the end that’s their risk.
The upside for the investor is the cost is lower. An actuarial approach can see up to 70% of the upfront funds taken for risk management. So the remaining 30% has to work really hard to justify your investment. (And, by the way, when you hear most people who do not understand “structured products” capital guarantees sprouting off about them this is usually what they refer to).
A hedging approach can mean the costs are as little as 6% to 12% (in the ones we have been considering lately anyway). OK, still a reasonable cost but when you factor in that you can then increase your leverage from 70% to 100% this is offset if the fund performs (and if it doesn’t you have the same net outcome as the other approach).
Remember, it is not the type of fund that you are investing in (in this case a “structured product”) it is the approach (the mandate or how your funds will be invested or traded). That is where you start your research. Then you look at how the fund is structured. A good approach or mandate can be “ruined” by a poor structure. While it is rare a good structure can save a poor approach it can certainly contribute significantly to your returns if both the mandate and the structure are good.
So like all things it pays to know what you are investing in and do your research (or trust professional advisers like Freeman Fox to help you).
*Important Information
Past performance is no indication of future returns.
Peter Spann is an Authorised Representative of Freeman Fox Limited, the Holder of an Australian Financial Services Licence.
The material in this communication is of the nature of general information only and neither purports nor intends to be advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person.
Investments can rise and fall in value. The decision to invest or trade and the method selected is a personal decision and involve an inherent level of risk. Although every effort will be made to explain the risks associated with the strategies not all risks can or will be explained in the seminars and/or accompanying material.
Before making an investment decision on the basis of any information presented in this program you need to consider, with or without the assistance of a Licensed Financial Adviser, whether the strategies presented are appropriate in the light of your particular investment needs, objectives and financial circumstances.
Investments can only be made on the application form in the Product Disclosure Statement. None of the information provided constitutes, and must not be construed as, an offer of securities or other financial instruments. Nor is it an invitation to you to take up securities or other financial products. Nor is it a recommendation to deal in any securities or other financial products.
jscott said:
You and Y-Man basically answer this.
The primary reason is the "sleep at night" factor.
While, yes, people will commit to equity funds without capital protection, they are much more comfortable committing "significantly" to it with the capital guarantee in place.
Even though there is a perception that "everyday" investors now understand equities their behaviour indicates they do not.
Let’s step back for a second - most people, if they attempted to actively sell properties right now they acquired in the last few years would take a loss (and in most markets across Australia that could be as high as 30%) or sell at a breakeven or profit not substantial enough to justify the investment, but they seem very happy that their investment decision was “right”.
When it comes to shares our phones ring off the hook if one of our recommendations goes down even 5%. And if one of our recommendations fell as much as 30% (ie: the same amount I am saying they would lose if they actively sold their properties against their peak valuation) they would be screaming! So while they say they are comfortable with their decisions their behaviour indicates otherwise.
I have a running joke with Fund Managers (this will NOT be funny to anybody apart from people in the Financial Services industry so go to sleep now), when they ask me what the risk profile of our clients' is...
My answer is, "Very aggressive...
UNTIL they start losing money!"
Knowing that our recommendations to clients are affected by allocation and risk profile, in order to balance their portfolios (which is an essential element of my strategy) we would be required to recommend significant leverage (borrowing) to invest in equities to match their exposure to property.
Side bar - remember most people (because they think they understand property), have really got themselves over exposed to leverage - we still see clients with in excess of 90% LVR AND variable interest rates while our current recommendation (generally) is no more then 70% LVR and fixed interest rates (for as long a duration as possible when you consider my prediction that they will peak early to mid next decade).
While gearing up and staying variable in a rising market might be a clever strategy most of our clients (and I suggest most people in this forum) have not adjusted their strategy in light of new economic circumstances which have been evident in most areas now for 3 to 4 years (ie: a repressed housing market, a rising equities market, and an economic circumstance showing further rises in interest rates on the cards).
So in order to get them exposure to the rising equities market and match their exposure to their residential property allocation we would have to gear them to levels that I am VERY uncomfortable with given their risk profile and behaviour.
The capital protection allows the risk of the investment to be matched (at least in the long term – the duration of the investment) with the risk profile of our clients – good news number one, and, as long as they can afford and are comfortable with the interest payments, allows them to add significantly more leverage to start to address the imbalance in their portfolios – good news number two.
Having said all that you CAN invest in the fund without the capital protection but you get a much lower LVR (up to 70%) and I think you are over estimating what the capital protection costs. Remember this is an equities fund so they take a hedging approach (ie: they buy a put) not a actuarial approach (setting aside large swags of cash invested at the cash rate to offset a 100% loss situation). Hedging is a significantly cheaper approach to capital protection then most other approaches. It slightly increases the risk to the provider (in that they have to actively manage the position) but in the end that’s their risk.
The upside for the investor is the cost is lower. An actuarial approach can see up to 70% of the upfront funds taken for risk management. So the remaining 30% has to work really hard to justify your investment. (And, by the way, when you hear most people who do not understand “structured products” capital guarantees sprouting off about them this is usually what they refer to).
A hedging approach can mean the costs are as little as 6% to 12% (in the ones we have been considering lately anyway). OK, still a reasonable cost but when you factor in that you can then increase your leverage from 70% to 100% this is offset if the fund performs (and if it doesn’t you have the same net outcome as the other approach).
Remember, it is not the type of fund that you are investing in (in this case a “structured product”) it is the approach (the mandate or how your funds will be invested or traded). That is where you start your research. Then you look at how the fund is structured. A good approach or mandate can be “ruined” by a poor structure. While it is rare a good structure can save a poor approach it can certainly contribute significantly to your returns if both the mandate and the structure are good.
So like all things it pays to know what you are investing in and do your research (or trust professional advisers like Freeman Fox to help you).
*Important Information
Past performance is no indication of future returns.
Peter Spann is an Authorised Representative of Freeman Fox Limited, the Holder of an Australian Financial Services Licence.
The material in this communication is of the nature of general information only and neither purports nor intends to be advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person.
Investments can rise and fall in value. The decision to invest or trade and the method selected is a personal decision and involve an inherent level of risk. Although every effort will be made to explain the risks associated with the strategies not all risks can or will be explained in the seminars and/or accompanying material.
Before making an investment decision on the basis of any information presented in this program you need to consider, with or without the assistance of a Licensed Financial Adviser, whether the strategies presented are appropriate in the light of your particular investment needs, objectives and financial circumstances.
Investments can only be made on the application form in the Product Disclosure Statement. None of the information provided constitutes, and must not be construed as, an offer of securities or other financial instruments. Nor is it an invitation to you to take up securities or other financial products. Nor is it a recommendation to deal in any securities or other financial products.
Full
Yes, they will quote that figure for a while - in fact we are now overbooking the seminar (to take into consideration no shows) so I suggest you come earlyish to get a good seat (or get a seat if Perth people are unlike everybody else an actually all turn up!).
COME ON Adelaide!!! Heaps of GOOD seats available! I might have to call in "rent a crowd".
Brisbane is at about 70% full.
Sydney (big venue) is at about 60% (but we have not called our list yet).
Melbourne is at about 85%.
Canberra is about 60%.
So if you are keen to come along please call my team on 1800 000 369 and book in now. FREE for clients, $48 for guests.
BOO said:
Yes, they will quote that figure for a while - in fact we are now overbooking the seminar (to take into consideration no shows) so I suggest you come earlyish to get a good seat (or get a seat if Perth people are unlike everybody else an actually all turn up!).
COME ON Adelaide!!! Heaps of GOOD seats available! I might have to call in "rent a crowd".
Brisbane is at about 70% full.
Sydney (big venue) is at about 60% (but we have not called our list yet).
Melbourne is at about 85%.
Canberra is about 60%.
So if you are keen to come along please call my team on 1800 000 369 and book in now. FREE for clients, $48 for guests.
Where do I sign?
Hi Peter,
I would like to and will come to your Adelaide seminar.
I have a question and a suggestion:
Question: will you personally be presenting? (edit: Oops just read your website, Don't answer!)
Suggestion: Your event as far as I can tell is not advertised very widely in Adelaide. If I didn't read this website I wouldn't know its on.
By the way I am half way through your $10M prop portfolio book and it is excellent.
Regards
A
Hi Peter,
I would like to and will come to your Adelaide seminar.
I have a question and a suggestion:
Question: will you personally be presenting? (edit: Oops just read your website, Don't answer!)
Suggestion: Your event as far as I can tell is not advertised very widely in Adelaide. If I didn't read this website I wouldn't know its on.
By the way I am half way through your $10M prop portfolio book and it is excellent.
Regards
A
Adelaide
Yes, I will personally be presenting all the workshops.
We did advertise in the Adelaide Bugle and didn't get a single call from it so we canned the advertising - we have marketed it to our database but seems people just aren't interested in the city of churches which is odd when you consider other venues are booking out.
PS
Yes, I will personally be presenting all the workshops.
We did advertise in the Adelaide Bugle and didn't get a single call from it so we canned the advertising - we have marketed it to our database but seems people just aren't interested in the city of churches which is odd when you consider other venues are booking out.
PS
Hi Peter,
After reading your web site and the posts in this thread, I still can't figure exactly what the presentation is about...
If it is based around strategies, it is more for me; if it is based around the recommendations of funds then it is not for me.
Perhaps we Adelaideans are just mere plebeians.
After reading your web site and the posts in this thread, I still can't figure exactly what the presentation is about...
If it is based around strategies, it is more for me; if it is based around the recommendations of funds then it is not for me.
Perhaps we Adelaideans are just mere plebeians.
Strategy
Is investing in funds not a strategy?
Is investing in funds not a strategy?
Peter Spann said:
No, it is indeed.
Topics
The workshop is primarily designed to promote our new Equity Enhance Income Fund.
However for the first hour and a half I will be talking about investing for income - regardless of the tool used.
The workshop is primarily designed to promote our new Equity Enhance Income Fund.
However for the first hour and a half I will be talking about investing for income - regardless of the tool used.
Me too!
Me too Geoff, me too. But our friends at the Donut are rather uptight about such things, but that's OK - I saw the draft PDS yesterday and it looks great.
I have also seen the performance figures of the 2 underlying funds and they are awesome!
Plus the interest rate is now 25 basis points under what we first expected so it is all looking real good.
geoffw said:
Me too Geoff, me too. But our friends at the Donut are rather uptight about such things, but that's OK - I saw the draft PDS yesterday and it looks great.
I have also seen the performance figures of the 2 underlying funds and they are awesome!
Plus the interest rate is now 25 basis points under what we first expected so it is all looking real good.
hi peter
bit late to post but can you send me an email for your next sydney seminar will have alook at the site any chance of sending a link to [email protected]o I can go there from the link.
bit late to post but can you send me an email for your next sydney seminar will have alook at the site any chance of sending a link to [email protected]o I can go there from the link.
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