Looking for a sure thing

I was recently discussing one of the capital protected products we had featured with someone who had worked as a trader for a number of years and had managed his 80 year old mother’s portfolio for some time. He had successfully sold her previous managed fund investments just before the large share market falls, was now very bullish about the markets and felt that now was a good time to reinvest that capital. As he was someone working in the financial industry, my natural response was “So why pay for the capital protection?”.

His concern was that although his mother had no immediate need for these funds, the stress related to any short term falls were likely to take a toll on her health and she therefore could not afford to lose anything. And with interest rates at such low levels, the likelihood was that inflation would gradually whittle away at the value of her portfolio. He argued that investment markets look to be very good value right now, “better to be in the market with a capital guarantee and not have the worry of day to day rises and falls, than be sitting in cash when the tide turns.”

I’m inclined to agree, after all, if you had invested in the ASX 200 in March you would be sitting on a 30% gain already.

The problem for many has been how to compare these products, there are a number of variations of protection and guarantees as well as a whole variety of investment options. As a result, in addition to our end of tax year features on margin loans and tax effective investments, this issue revisits capital protection to try and compare the wide array of capital protected products currently on offer.

 

Reduce your fees

This issue also sees the launch of our commission rebate program to investors. I have always said that two of the most important factors in producing the best returns on your portfolio are fund performance and fees. And although you can’t improve the overall performance of your fund, by simply switching brokers, you can guarantee that you’ll reduce your fees.