Friday, 18 December 2009


The recent announcement that Fidelity is to launch a China-focussed fund in March of next year would normally attract significant attention, China has been out-performing most other markets of late, and consensus appears that it will continue to do so for some time to come. What made the announcement even more note-worthy is the fact that the fund is to be managed by Anthony Bolton, the previous manager of arguably the UK's most successful investment fund; the Fidelity Special Situations fund.
Much light has been made of the fact that Mr Bolton has chosen to return to fund management, in-particular that he has chosen to spearhead Fidelity's charge into what he refers to as "the greatest investment opportunity of the next decade."
Until recently China has played a star role in many emerging market funds, more likely as part of a portfolio comprising other emerging markets such as Brazil and India. Only relatively recently have fund managers recognised the potential of the Chinese economy as an investment story in its own right, a number of China-centric funds have subsequently entered the market.
Many investors have benefited from the performance of such funds over the last 12 months, although it is very much the long-term appeal of China that has no doubt attracted seasoned managers such as Bolton, as he explains "Allocations to these markets are way too low. If I am right about the economic environment, a lot more money will come from investors in the developed world to the emerging world. The centre of gravity is shifting. If China becomes the world's second biggest economy, people just have to change the way they think about it."The result of China's ascendance as an economic superpower is that China and the US now make similar contributions to increases in world production. In fact, China has overtaken Germany to become the world's third-largest economy and some forecasts suggest that it will also overtake Japan, in GDP terms, in 2010 or 2011.
Of course, a major component of the China success story is an extremely strong reputation for quality of global exports and domestic consumption. China holds the top position in the world's car market, year to date. Even so, only 2% of the population actually own a car, compared to around 50% in the US and European Union. Additionally, with 600 million Chinese using mobile phones and 250 million accessing the internet, China is home to the world's largest and fastest growing telecoms market. Mindful of the dependency on exports, the Chinese government are making provision to ensure that policies are in place to encourage and sustain local, domestic consumption. Such proposals have been met with enthusiasm from the IMF who "supported the steps that China is taking to bolster private consumption as part of a comprehensive, well-sequenced strategy aimed at rebalancing China's growth model."

QROPS ADVICE: Investment News: Spotlight on 'real asset' inflation hedging

During the recent, unprecedented times, governments worldwide have been called upon to utilise a range of financial and economic theories in a bid to alleviate the impact of what is now commonly referred to as a truly global recession. Whether packaged as 'Quantitative Easing' from the UK government, or the 'Troubled Asset Relief Programme' from the US, financial stimulus packages around the globe have been introduced to keep the flow and availability of finance constant. It is still far too early to gauge the success of such measures, however the Bank of England is currently revising its original suggestion that it will need "at least three months" to determine Quantitative Easing a success or not.
Whilst there is consensus that the need for such measures were absolutely necessary given the circumstances, history and many financial commentators point to a potential side-effect of introducing artificial financial injections to an economy; inflation. Inflation is a by-product of acceleration in economic growth of any market, brought about by sharp increases in the demand and subsequent price of local assets, goods and services. Such increases are particularly susceptible during times when interest rates are particularly low, given that more money is borrowed and spent as opposed to saved.
The Bank of England Chief Economist, Spencer Dale recently played down any risk of such a spike commenting "the BoE needed to be alert to the risk that quantitative easing could drive up asset prices but there is no evidence that is happening yet", although he went on to say that he felt that the local economy should expand "a little less rapidly" to avoid the possibility that quantitative easing might lead to an unwarranted increase in asset prices. Given that many of the world's economies have adopted similar measures to that of the UK (i.e. low interest rates and financial stimulus measures), the concerns of the BoE are shared globally.
Fundamental to the workings of most asset classes, inflation is something that fund managers cannot control, and as a result spend much of their time trying to predict. The reason for this is the intrinsic relationship between inflation and its effect on the 'true' value of any movement of an investment fund. If inflation is high or rising, assets held by fund managers will more likely be more difficult to attain and may deter from any added value that a fund manager creates, hence the reference to inflation as being a 'stealth tax' in investment management circles.
Many investors who share concerns for rising inflation revert to an investment practice that, in theory, is immune from the threat of inflation; inflation hedging. An inflation hedge is an asset that loses little value in periods of rising prices. Thus, it holds its value and its purchasing power during inflation. The types of instruments that fall into this category are often referred to as 'real assets', so-called owing to their intrinsic value, i.e. they have a value of their own and people value them for their direct or indirect usefulness, examples include gold, property, wheat, land etc. Real assets are the opposite to what many refer to as 'financial assets', which could be defined as something who's value is determined as a direct result of the fortunes of a related or un-related entity, e.g. stocks, shares, government gilts. The school of thought being that by definition, real assets have a value of their own, inflation does not erode their value. Thus, real assets are all considered to be inflation hedges.
There are a wealth of funds available that trade solely in 'real assets' and purposely avoid instruments that can be affected by the movement of inflation. It is for this reason that funds such as these are particularly well-regarded as being part of a diversified portfolio. The varied range of such funds is ever-changing, the most popular being commodity-focussed (e.g. precious metals, natural resources or agricultural), although there are some funds that will hold highly specialist assets such as fine art, fine wine or antiques.
Patrick Koupland of Castlestone Management, managers of the Hansard Aliquot Gold Bullion and Hansard Aliquot Agriculture fund commented "Many investors are looking to diversify their portfolios with exposure to gold and other commodities. Gold in particular can be used as a hedge against inflation, and with the recent global stimulus packages taking hold, a rise in inflation levels is widely considered as inevitable. However, this diversification cannot be achieved from a gold equities fund, which buys not the metal itself, but stocks in related companies such as gold mines. Direct exposure to such commodities is the only way to truly diversify. This has been proven over the past five years where gold bullion and precious metals have given a better return to investors than gold equity funds - and with less risk.
These assets are one of the best hedges against the devaluation of money while silver and platinum have the economic sensitivity to rise with the improving economy. A strong validation of this is the fact we have seen the Chinese, Indian and other governments piling in to gold and stockpiling other commodities."
Hansard has a variety of fund links across a diverse range of asset classes, whether your clients have a conservative, balanced or adventurous outlook. To find out more about any of our fund links please contact your Hansard Account executive who will be able to assist you further.


Asian stocks outside of Japan may extend a bull market into 2010, helped by declining risk premiums, a recovery in economic and earnings growth, and low interest rates, according to JPMorgan Chase and Co. The MSCI Asia-Pacific excluding Japan Index may climb to 530 by the end of next year, JPMorgan analysts led by Adrian Mowat wrote in a report on Tuesday, representing a gain of 29 percent. They cut their rating on Thai shares to "neutral" from "overweight." The global economy should grow 3.4 percent next year, including "above consensus" expansion of 3.3 percent in the U.S. and 2.6 percent in Europe, benefiting demand for the region's exports, according to the report. Interest rates in the largest developed economies are also likely to stay unchanged next year, the brokerage also said.
India's local-currency rating outlook was raised to positive from stable by Moody's Investors Service, which cited a strengthening economic recovery. The change was "prompted by increasing evidence that the Indian economy has demonstrated its resilience to the global crisis and is expected to resume a high growth path with its underlying credit metrics relatively intact," Moody's analyst Aninda Mitra said in a statement on Tuesday. Moody's action comes after India's USD1.2 trillion economy expanded 7.9 percent in the three months to Sept. 30 from a year earlier, the quickest pace in six quarters. Only China grew faster in the region, with gross domestic product increasing 8.9 percent. Moody's has a Ba2 rating on India's local debt.
US retail sales in November again rose by more than expected, according to official figures. Sales rose 1.3%, the biggest gain in four months, the Commerce Department said, after retail sales in October climbed 1.1%. Petrol sales jumped 6% and sales of cars, building materials and other goods helped push up the data. Separate data also provided a boost for retailers, with the Michigan consumer confidence index rising sharply.
Brazil's central bank will keep the benchmark interest rate at a record low through 2010 because concerns that inflation will accelerate are "exaggerated," according to Daniel Tenengauzer, head of emerging-market fixed income and currency at Bank of America. Consumer prices will rise 4.5 percent next year compared with 4.31 percent in 2009, according to a central bank survey of about 100 economists published on Monday. Inflation expectations are overstated because "economic activity is not as strong as people think," Tenengauzer added.
Forecasts for annual contract prices for iron ore, a USD160 billion-a year-global market, were raised by Macquarie Group Ltd. and JPMorgan Chase & Co. after a surge in demand from China. Steelmakers and traders in China, the world's biggest consumers, boosted imports 12 percent last month to meet demand from makers of cars and appliances. Iron-ore demand from U.S. and European steelmakers will also increase next year, joining China, Vale SA, the world's largest producer, said on Tuesday.
The dollar rose to a more than two-month high against the euro amid speculation improving economic data in the U.S. will spur the Federal Reserve to signal an exit from easing policies intended to combat the recession. The U.S. currency climbed against 14 of its 16 major counterparts after futures indicated a 48 percent chance that the Fed will raise its key rate by at least a quarter-percentage point from near zero by June. The Australian dollar fell after the central bank said its decision to raise borrowing costs two weeks ago for a third straight month gave policy makers increased "flexibility" at future meetings.


Emerging markets seem set to be one of the growth stories of 2010, but most fund managers agree that it is not exports which lie at the heart of this story, as was initially thought, but rather the rise of the domestic consumer.

Ewan Thompson, manager of the Neptune Emerging Markets Fund, comments: "While the outlook for infrastructure, materials and manufacturing remains very positive in the medium term, we believe that moving into 2010 the most exciting investment opportunities will be found in the consumer sectors across emerging markets."

Chris Palmer, Gartmore's head of global emerging markets, expects corporate earnings growth to drive emerging markets in 2010. He says: "We estimate that earnings will grow by 25 per cent in 2010 compared with the price/earnings ratio of 13 times as of October 2009. At the same time, the return on equity from emerging market companies is over 40 per cent higher than that of the MSCI World Index."

Mr Palmer believes that, while the market rally of the past few months was characterised by an initial rebound from depressed levels of valuation, the next phase will be driven by growing corporate profits. Companies that can finance their growth through their own cash flows will have a key advantage - and here emerging market companies with their lower debt levels have the upper hand over their developed world peers.

While most financial advisers tend to favour generalist emerging markets funds, as these spread the risk across different geographical areas, Bryan Collings, manager of the Ignis HEXAM Global Emerging Markets Fund, believes country allocation will be crucial going into next year. He says: "Country allocation is as important as ever. By the end of 2010, we expect China, Russia and Turkey to have delivered strong returns. Growth in China could be much higher than 10 per cent, despite the central bank's pre-emptive attempts at monetary tightening."

With China set to continue its dominance in the emerging markets sphere, Anthony Bolton's imminent move to Hong Kong to manage a new portfolio dedicated to investing in China and China-related opportunities could be one fund to watch in 2010. While Fidelity keeps mum over whether the fund, expected to be launched in March next year, will be available to retail investors - Mr Bolton's impressive track record, together with the strong case for China, will certainly make this a compelling investment proposition.

Mr Pemberton says that, while 2009 saw the economic balance of power tilting even further towards Asia and the emerging markets, valuations are starting to look a little stretched and any corrections can be quite savage. But, as he believes exposure on a long-term basis is essential, he recommends buying on pullbacks. "First State Asia Pacific Leaders Fund and JPMorgan Emerging Markets Fund are good solid choices, while Allianz RCM BRIC Stars is a higher octane fund choice," he says.

Thursday, 17 December 2009


> Transfer Offshore
The transfer of your UK registered pension can be effected without the deduction of any UK tax.
> International Use
No matter where you move in the world, nor how often you may move, your plan stays in the neutral offshore jurisdiction of Guernsey.
> Guernsey
Guernsey is an independent, well regulated and internationally accepted jurisdiction with a firm framework of legislation and practices in the financial services sector. Pension providers on the island have worked closely with HMRC to ensure a robust QROPS offering for both its resident and international clients.
> Eligibility
Anyone over the age of 18 and under the age of 75 years, excluding Jersey, US and Canadian nationals or residents, is eligible to join the Plan.
UK residents will only be eligible to join the Plan if they have clear intention to become non-UK tax resident within the next 12 months.
> Entry Level & Contributions/Transfers
• £25,000 or currency equivalent minimum single contribution or transfer
• £3,000 or currency equivalent pa minimum regular contribution
• £1,000 or currency equivalent minimum ad hoc contribution
There are no penalties to stop, start or amend contribution levels, nor is there a limit on contributions.
> Transfer Value
There are no restrictions on the amount that can be transferred. This allows you to consolidate your pension assets.
> Consolidation
This reduces the requirement for you to continually transfer your pension and your assets remain in a politically stable and well regulated environment.
> Lifetime Benefits
• An optional tax free lump sum;
• Income payments must commence within one year of taking a tax free lump sum;
• Income payments may be taken by way of an annuity, an annuity certain, or (for International Members only), a regular drawdown.
> Death Benefits
All remaining assets upon your death are distributed to Named Beneficiaries. Options available upon death include:
• An annuity to spouse or dependants;
• Payment of the proceeds of your plan to a new plan(s) for Named Beneficiary(ies);
• Retention of your plan in trust for distribution at a predefined date or future event (within 2 years of your death);
• Winding up of your plan and payment into your estate;
• Winding up of your plan and payment directly to Named Beneficiaries.
In order to cater for changing circumstances you can easily amend your succession instructions.
Annuities are not purchased from Life Assurance companies. Thus, on death all remaining assets are returned to your plan for distribution in line with your wishes. These assets would otherwise be lost.
> Tax
Tax Efficient Growth
Income and capital gains from the assets within your plan are not subject to Guernsey tax. Therefore, the assets within your plan grow in a tax efficient environment.

Apply online at

Wednesday, 16 December 2009

QROPS ADVICE: Investment News: Sterling is the X-pat factor

Sterling is the X-pat factor, as cash-strapped Britons abandon the Eldorado dream
by Helen Burggraf
UK expats are increasingly throwing in the beach towel on their expatriate dreams, as the weak pound has sent the cost of living in the eurozone soaring, according to recent data from

Reallymoving, a UK... website that provides online quotes for home-movers, said the number of people requesting quotes to ship their household belongings to the UK has increased by 37% over the past year, while there has been an 18% decline in the number of people moving from the UK to the continent during the same period.

The company said this “uplift in demand for removal quotes from expats in Europe wanting to relocate back to the UK” represented a “turnaround” from the exodus of Brits to the region that predated the slide in the value of Britain’s currency.

One pound is currently worth €1.11, down more than 25% from three years ago, when it was at €1.49, and 20% from two years ago, when Britons got €1.39 for their pounds.

UK retirees who receive their pensions and investment income in sterling have been hardest hit by this decline. Those who work in the eurozone but who are paid in pounds have also seen their incomes contract significantly.

Recieve your pension in currencies other than Sterling - contact 0044 1664 4446256 for details.