Fund Review
Introduction and Risk Levels

FinanceSpain.com fund review section is designed to provide information and background to current investment funds, and provide investment news. The contents of this page should in no way be seen as an endorsement for any product or service. No investment decisions should be taken based on the conents of this website alone. Always seek professional advice.
 
The funds listed below are assigned a risk level, to give an idea of volatility :
 
Risk Level 1 - Cash Deposit (e.g. bank and savings account)
Risk Level 2 - Cash and Bond Funds (e.g. gilt fund)
Risk Level 3 - Property & Distribution Funds
Risk Level 4 - Balanced and Managed Equity Funds
Risk Level 5 - Global and North American Growth Funds
Risk Level 6 - Emerging Markets and VCT's
 
 
2011
 
Given the massive impact of the credit crunch, investors have remained cautious with equity investment. This is even with record low interest rates, and economy-defying strength in coporate results. As we move in to a new phase in 2011, there are signs of more positivity. In the UK the FTSE breached the 6000 level at the end of 2010, for the first time in two years. The global stockmarkets have been bullish for some months now.
 
OBSR, a fund rating service, believe that 2011 is due to be a more normal year in terms of economic cycle. They also feel that the negative sentiment to equities which has lasted the better part of a decade, may turn. Flexible monetary policies in the developed world, double digit corporate growth, and relatively low valuations, is the likely cause for general bullishness on equities among asset allocators. Underlying macroeconomic data is also looking solid for the longer term. Global companies with strong franchises and a healthy balance sheet look attractive.
 
Brandeaux Student Accomodation Fund - Risk Level 3
This fund invests 100% in UK property in the student accommodation sector. The objective is to achieve rental income and capital growth. The student accommodation sector has a traditionally more stable rental history than the general property rental market.
 
 
 
There are a wide number of student accommodation funds on the market, however the Brandeaux fund seems to have out performed most, returning a 9.7% per annum return. This return has been relatively steady through recent market turmoil.
 
Fund Performance
 
Last 12 months : +10.18%
Last 5 years : +60.65%
Average since launch : 9.71% (per annum)
 
As with all funds that seem to have super-performance compared with the sector index, caution needs to be taken. There may be hidden risks or the chance that this is a 'bubble' waiting to collapse. An example of this can be seen in the Traded-Endowment-Policy funds, which suffered a collapse at the end of 2008, after several years of strong performance.
 
 
The content of this website may contain opinions of the writer, in no way should they be considered advice, and no decisions should be based on them. Always consult a professional financial advisor.
 
 
Veritas Global Income Fund - Risk Level 5
The Veritas Global Income fund has outperformed any similar UK fund since launch by more than 10%. It has a strong European and Asian bias and has restricted losses to a third less than any similar UK fund since launch.The case for global income investment has gained a much stronger footing in 2010 following the BP crisis. It has an attractive yield of 4.8%
 
 
 
As the name suggests, this fund invests in global equities, to provide a high and growing level of income. The Trustnet fund factsheet classes the fund as a 'three crown rating', the highest rating achievable. The five year return on this fund has been just over 60%
 
 
Links and Information
 
 
 
 
 
Building an Investment Portfolio

When creating an investment portfolio, the first starting point is always the goals of the investment. This will define investment spread and structure.
 
  • Long term growth, for eventual retirement income
  • Immediate income
  • Speculation
  • Stable and protected environment for wealth
  • Specific projects e.g. property deposit, childrens fund, repay mortgage

The list could be endless, but for all the different goals there is an appropiate risk level. It's this risk level that will define the basket of funds chosen. A retiree looking for income from capital, will be happy to have little or no growth, in exchange for income and capital security. An individual with 35 years till retirement may be happier to take risks with their investments, to outperform inflation and achieve growth over a long time span.

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Sector Review
International Property Sector Performance - Risk Level 3
 
This sector invests in real estate both commercial and residential, it covers a wide area of property type, the chart below maps the return vs. volatility of 4 property regions over the past 5 years. International, Asia, Europe, North America.
 
Offshore Regulated Funds : The lowest return and highest volatility is America, the highest return with lowest volatility is International. Click the image to enlarge.
 
 
FSA Regulated Funds : The highest return is North America but with very high volatility, Europe has much lower volatility but has faired poorly in the past 5 years.
 
 
 
The key difference between the two charts, is the FSA regulated funds have a markedly higher return than the offshore regulated funds in this example.