LifeTalk Logo

Navigation

Over 11,000 Financial Advisers, IFAs, Financial Planners and industry professionals use LifeTalk to share best practice, get help with exams, find Social Media advice and much more. Sign-up FREE here.

 

 

Articles


The Jingoistic (and foolish?) Investment Approach

What are the chances that an investor will live in the same place that represents the best investment returns at any given time? One would think fairly slim! 

So why is it that investors generally bias towards their local markets? Especially since most investors who use professional advisers work on asset allocation models. You would think that such a model – essentially use Beta to generate returns – would have limited geographical bias. The assets sought would be those that would have the best risk/reward potential? 

But this cannot be the case unless we all just happen to live in the same geographical location that has the best risk/reward potential? 

The reason we state this is because if you look at the stats you will see a revealing picture: of all equity holdings that UK investors have in funds 61% is in the UK; of all fixed interest holdings that UK investors have in funds 63% is in the UK; of all property holdings that UK investors have in funds 92% is estimated to be in the UK (source: Lipper fund statistics) 

Surely no asset allocation model can seriously predict that the UK will be the most suitable area for the risk/reward approach? 

Some seriously wealthy and proven investors use versions of the asset allocation model: Jim Rogers, George Soros – to name a couple; are they investing locally when they look to find the best areas to invest? No, they do not. They seek out the best investments they can find in the best areas, sectors or industries. 

We accept that once you depart the UK (in terms of your money being invested overseas) you may add in another element in the form of currency movements, which can affect the risk being taken, however "in the round" this can be measured, factored in and if required the extra risk controlled. It is not an inherent reason to ignore overseas assets. 

It is an irony of this argument that by default many investors in the UK did very well during the 1990-2010 period because the one asset class in the UK that has done exceptionally well measured internationally was property. UK residential property returns were at the top end of the league tables. However investors seem to have benefitted by default rather than by design, as most owned their properties rather than deliberately invested in them per se. 

As it is today can you seriously conclude that UK represents the home for the best asset class mix? 

Is the risk/reward picture better in the UK than elsewhere? 

We believe that investors should seek out the best asset classes in the best locations. In this respect for those looking to hold property we would urge a strong consideration of the US property market: where we believe the fundamental position is more attractive than in the UK. In particular we have a fund that focuses in on one special sector within this asset class: foreclosed properties for sale in Detroit, where the risk/reward position seems heavily in favour of the buyer and the 'fundamentals' are seriously compelling. With high yields and positive cash-flow from day one the fund offers investors attractive reasons for using it within their portfolios. 

If you are pursuing a strategy of seeking out the best asset opportunities from the best markets then we would suggest that you should investigate how we have constructed our fund, how we have approached the risk management and the strong reasons why this area and this fund have a home in suitable client portfolios. 

 

If you want to find out more about the Temple Rock fund that provides this opportunity then please contact us uk@temple-rock.com or visit or web site www.temple-rock.com

 

[Sponsored article by Temple Rock Fund PCC Ltd]

 

Please share this page to LinkedIn

Please click here to retweet this on Twitter

 

 

 

 

 

Author: IFA Life Sponsored Post
Posted: Tuesday, June 25, 2013 | 11:20:22 AM


Bookmark and Share

Comments

21 November 2013 | 12:16:40 PM  Temple Rock wrote:
Temple Rock does not in the business of flipping its portfolio so therefore not associated to the risks you have mentioned. We have the same approach as Blackstone's home rental bond which has seen and investment of over $7.5 bn and the acquisition of 40,000 homes over the last year.
23 October 2013 | 7:34:37 PM  Adeline Luther wrote:
This looks like pitching in for business involved in house flips. It would do well to remember that house flippin g business carries its own set of risks- many of which are outside the control of the investor.

Leave a comment

You must be logged in to post a comment
Developed by BouncingFish