Author: Cris

Categories
Investment

Vietnam’s strong start to 2013

Regular readers will know that I’ve long been optimistic about Vietnam. For most of that time, the market has resolutely declined to play along, so 2013 has been a pleasant surprise so far – the VN Index is up almost 20% since the start of the year.

However, it remains to be seen if those gains will stick. There’s still plenty for policymakers to do in terms of sorting out the economy’s many problems (FT Beyond Brics has a quick primer), although they seem to be making some progress and deals like Mitsubishi UFJ’s recent agreement to buy a 20% stake in VietinBank can be see as a long-term vote of confidence.

And despite the slowdown in growth, there is the odd spot of good news – exports were up almost 20% year-on-year in 2012, reflecting the country’s improving position in manufacturing, as Capital Economics notes:

Continue reading “Vietnam’s strong start to 2013”
Categories
Updates

Commfreefunds no longer taking on new clients

I’ve recently noticed that UK discount funds broker Commfreefunds as stopped taking on new clients – this is apparently because the firm is planning to launch a new service, presumably in line with the changes brought about by RDR and the platform review.

The firm was one of the cheaper options for investors with smaller portfolios to access the Cofunds supermarket, rebating all broker commission in exchange for a 0.19% annual fee. With it now out of the market for now, Interactive Investor will generally remain the cheapest Cofunds option for larger portfolios, while Clubfinance is probably the lowest-priced option for smaller ones (although ICICI’s new service may be competitive for those in between).

I’ve updated the fund supermarket comparison table to reflect this.

Categories
Investment

Unregulated timber investment schemes

The other week, I wrote an article for MoneyWeek on timber investing, looking at some of the interesting properties of timber as an asset class and what drives returns. It’s probably behind the paywall right now, but will be free in a few weeks – or you can get a free trial to read it now.

In the article, I focused on well-established investments such as the US timber real estate investment trusts (Reits) but I subsequently received questions about unregulated timber investments that promise retail investors rather eye-popping returns. I don’t want to comment on specific schemes, but here are some general points to bear in mind about arrangements of this type, which I’ll post here as a brief addendum to the article.

Continue reading “Unregulated timber investment schemes”
Categories
News

RDR around the world

Anybody who follows the UK financial services services market will be well aware that the Retail Distribution Review (RDR) is set to shake up the financial advice model and the pricing of many investment services. But the UK isn’t alone in this – while RDR is the first major review to come into effect, a number of other countries have been looking at similar measures.

The FT has a recent piece on the pending commission ban in the Netherlands – it’s probably paywalled for most readers, but the first couple of lines give the gist:

Dutch banks are putting pressure on asset managers to review their fund ranges in light of a self-imposed ban on inducements that will debut in January 2014.

Managers say they must create share classes that have commission payments stripped out if they want to maintain their lucrative business ties with large distributors such as ABN Amro, Rabobank and ING.

It’s interesting to see that the Dutch banks (in the Netherlands, as in most continental European markets, banks are the main fund distribution channel) are being fairly proactive about this. That contrasts with the UK experience, where many parts of the industry have left things as late as possible: Some kind of ban on trail commission to discount brokers and platforms seems almost certain within a year and yet very few firms have introduced unbundled direct-to-consumer pricing.  

Continue reading “RDR around the world”
Categories
News

CSRC clampdown sees first IPO pulled

Following reports about the Chinese regulator getting tougher on IPO candidates, the new measures already seem to be having the desired/feared effect. From Finance Asia today (and probably soon to disappear behind the paywall):

Only a day after China’s securities regulator announced it would closely vet the financial statements of listing hopefuls, companies started withdrawing their applications for new share sales.

…

Guizhou Zunyi Titanium, a titanium sponge producer, announced on Thursday that it would cancel its long-awaited initial public offering and has received confirmation from regulators on the withdrawal. Zunyi was the first company to scrap its IPO plans and more companies are expected to do the same.

…

Deloitte said earlier this month that about 20% to 25% of current IPO applicants on the mainland may withdraw or re-consider their listings in 2013. If that estimate is correct, up to 220 companies will cancel A-share IPOs this year, lowering the waiting list to 662 firms — still a big number.

Despite the disquiet of the brokers – who of course benefit from higher numbers of IPOs, regardless of the quality of the company – this is probably a good thing. A shortage of listed companies is not the main problem for the A share market.

Categories
Investment

Management costs vs marketing costs

Last week’s Wall Street Journal had a short piece about the work of an exchange traded fund manager. While brief, it gives some obvious insight into why expense ratios for ETFs can be so much lower than those for traditional actively managed funds:

At 30 years of age, Hao-Hung (Peter) Liao leads a handful of portfolio managers at Van Eck Global who oversee some $24 billion in investor assets around the world. Mr. Liao’s rapid ascent—and the parallel success of his tiny team in handling its outsize mission—owe a great deal to the unique traits of the investments in which the team specializes: exchange-traded funds.
…
Such ETFs are easier to manage than index-tracking mutual funds. A single person or small team can oversee a long list of ETFs, as Mr. Liao and his team do. Indeed, 87% of Van Eck’s ETF assets are in the 38 funds run by Mr. Liao and his staff of three portfolio managers and analysts.

Continue reading “Management costs vs marketing costs”
Categories
News

North Korea seeks help opening up?

There was an interesting story in the German press a week ago claiming that the North Korean authorities had asked some German specialists to help develop a framework for attracting foreign investors. From Der Spiegel’s English site:

According to an article to be published on Saturday by the daily Frankfurter Allgemeine Zeitung, the communist regime in Pyongyang is preparing to open up the country’s economy to foreign investors. Moreover, it has enlisted the assistance of German economists and lawyers to lay the groundwork for the move.

“There is a master plan,” one of the economists involved in the plan told the paper. “They want to open up this year.” The FAZ did not identify the economist, but noted that he works at a respected German university and that he had advised other governments in Asia in the past.

Whether comes to anything is another matter, although news there suggests some tentative steps towards change. In terms of what might happen, this is worth noting:

Continue reading “North Korea seeks help opening up?”
Categories
News

CSRC tries to clear IPO pipeline

China’s securities regulator has decided to toughen its review of companies aiming to list on the A share market, according to several recent stories including a couple of  reports in Caixin.

All of the 882 companies waiting for China Securities Regulatory Commission (CSRC) approval to go public have been required to submit their financials for 2012 by the end of March. The regulator said it would check the results at randomly chosen firms to prevent fraud.

Continue reading “CSRC tries to clear IPO pipeline”
Categories
News

RDR update: Alliance Trust Savings and ICICI Bank UK

The temporary but large reduction in funds available for investment on the Alliance Trust Savings platform – give quite high profile coverage in the Daily Telegraph – is another example of why picking a new fund supermarket requires caution while the effects of the Retail Distribution Review are still working their way through.

I am not inclined to castigate ATS too much over this – it is reacting to RDR and the platform review far more pre-emptively than most of its peers and it’s to be commended for moving to clean pricing as quickly as possible. Perhaps the change could have been better communicated, but ATS seems to have a fairly comprehensive RDR changes page to update users on progress.

The new terms on fund charges [PDF] generally look significantly better. Obviously, you need to allow for ATS’s charges on top of the clean fees, but seeing some firms already bringing their fees down on a transparent basis should hopefully drive competition across all platforms.

Continue reading “RDR update: Alliance Trust Savings and ICICI Bank UK”
Categories
News

Wegelin ends with a whimper

The Wegelin saga has reached its conclusion with a somewhat unexpected guilty plea:

Switzerland’s oldest bank is to close permanently after pleading guilty in a New York court to helping Americans evade their taxes.

Wegelin, which was established in 1741, has also agreed to pay $57.8m (£36m; 44m euros) in fines to US authorities.

It said that once this was completed, it “will cease to operate as a bank”.

The bank had admitted to allowing more than 100 American citizens to hide $1.2bn from the Internal Revenue Service for almost 10 years.

The Swiss banking industry seems decidedly rattled by the plea and by what the Wegelin partners have said, as demonstrated by this commentary:

Continue reading “Wegelin ends with a whimper”