chiangmai
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Post by chiangmai on Aug 22, 2017 6:59:21 GMT 7
You must have balls and nerves of steel to feel comfortable buying a single share offering, it puts me through grief trying to figure out which fund to buy and that's something that's actively managed by knowledgeable folks and contains multiple share offerings spread across a wide geographic range.
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Post by Fletchsmile on Aug 22, 2017 10:46:01 GMT 7
When I was much younger I invested in whatever asset class/sector seems most likely to produce large returns, paying little attention to risk. As I've grown older and (I like to think) wiser, I've come to appreciate investments which plod along steadily, are consistent, cautious and defensive. They now make up about a quarter of my portfolio. RICA and PNL are two of these. Fletch questioned whether RICA has lost its way. I prefer to think that they have stuck to their tried-and-tested principles, even though those principles have not produced great performance over the last few years. Have a look at this performance chart for the last 10 years. A is RICA, B is a FTSE All Share ETF. Two things immediately stand out to me: (1) in 2007/8 RICA rose in value whilst the FTSE fell dramatically, (2) over ten years RICA has beaten the FTSE quite comfortably. The trust's all time maximum drawdown has been 8.6% - far better than the FTSE's 51%. All looks good to me. Looking at the future, there are two things I can be pretty sure of: (1) there's going to be a stockmarket crash, and (2) interest rates are going to rise. RICA is well positioned (as in PNL) for both those events, whenever they happen. "The heavy weighting to index linked bonds of around 40% is perhaps useful for diversification, but you have to wonder whether someone would just be better buying a pure index linked bond fund or even tracker if they want that. If someone supplemented it with a global equities fund they'd be outperforming RICA and likely at lower cost. Have they really got expertise in the inflation linked bond sector anyway or would a more proven manager or tracker make sense? I can't see where they add value in their fund." Yes, a global equities fund + index linked bond ETF would almost certainly have outperformed RICA, but only by taking on a lot more risk. And when markets crash and inflation rises and (perhaps) Sterling rises again, I can be pretty confident that RICA will outperform. They add value to the trust by making calls based upon their view of the economic situation. That is not something I am capable of doing with any high degree of confidence, so I pay for their expertise. Admittedly, I'd prefer to pay less, but that's another story. (The asset allocation of the trust has changed significantly since 2004 when it was launched.) rgs wrote "Why anyone would hold it [GSK] is beyond me, as mentioned before the days of buying old established stocks and sitting on them are long gone." Old establishment stocks are dependable. Good businesses with good franchises. That's why they have a place in defensive portfolios. To be honest, when I see funds holding the likes of Amazon, Alphabet, Facebook, Alibaba, I question the fund managers' wisdom. It's a real turn off. Can memories be so short as not to remember the dot com bubble? I saw that comparison to FTSE All Share on their website It's totally meaningless and part of why I wonder if they've lost their way and are just dragging up whatever they can to justify poor performance in recent years. A) What they compare to is apples and oranges1) Nowhere in their objectives do they say they benchmark themselves vs the FTSE All Share in any way 2) They have only 9% in UK equities. So it's a total apples vs oranges comparison. They do however have over 30% in global equities So if they were going to compare to an equity index then a world index would be much more meaningful, but for some reason they have shirked that Probably because something like the FTSE world index ex UK has returned almost double the FTSE All Share over that 10 years period. FTSE All world ex-UK has returned 160.9% over 10 years. FTSE All share UK has returned 83.9%. (Ruffer BTW has returned 145.9%) So all they are proving is that by adding global equities to a portfolio they have outperformed the UK indices. Very much to be expected given that global equities have out-perfomed/ doubled UK equities. Rather disingenuous to compare a global mixed fund to UK equities. B) The 10 year time frame is conveniently well-timed
"Luckily" for them the 10 year time frame starts just before the global financial crisis. That the fund holds bonds will obviously mean it tanked less than equities. Again no skill in that. If they picked a start just after the GFC then they would look much worse though Even not picking just after the GFC but a while later, as illustrated by the 5 year performance, they look very weak Over 5 years the FTSE All share was up 57.6%, FTSE World Index ex UK up 106% and RICA up only 25%
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Post by Fletchsmile on Aug 22, 2017 11:36:57 GMT 7
Yes, a global equities fund + index linked bond ETF would almost certainly have outperformed RICA, but only by taking on a lot more risk. And when markets crash and inflation rises and (perhaps) Sterling rises again, I can be pretty confident that RICA will outperform. They add value to the trust by making calls based upon their view of the economic situation. That is not something I am capable of doing with any high degree of confidence, so I pay for their expertise. Admittedly, I'd prefer to pay less, but that's another story. (The asset allocation of the trust has changed significantly since 2004 when it was launched.) Just on RICA's volatilities I'm not convinced at all that a global equities fund + an index linked bond fund ETF would be much more risk, when you look at components. Given that RICA is around 30% global equities and 40% index bonds, and would be narrower in focus than either of the two sectors. It's 1 year and 3 year volatilities (Standard Deviation) are both over 7+ and FE risk score 70. By comparison something like Jupiter Strategic Bond Fund has SD's of 2+ over that period and FE of only 17. Your average global equity fund will have a SD of somewhere around 8 to 11. So combining the two would likely be lower than RICA RICA did do well around the GFC time - because of its bond allocations no doubt. Since then it has languished, which is why I wonder if they have lost their way. Their early years were good, but since after the GFC it has been poor. It really is difficult to see how they are generating alpha/ adding value. The hope it will fair well in a crash and past performance will repeat itself is a leap of faith. That the allocation has changed significantly since 2004 would also be a question. They did very well in early years. They have been doing poorly for the last 8 or so. If the asset allocation is significantly different to when they did well at the start and also not performing in recent years, what exactly is it? There's an assumption this is a defensive fund. However, it doesn't really state that in it's objectives. It can go almost anywhere. Yet it has failed to make the calls in recent years in terms of performance, and it's recent 1-3 year vols aren't fantastically low either. So Low return, moderate risk. It goes so many places with so many different things it is difficult to compare and see what they are good at these days and where they add value if anywhere. Perhaps the annual report compares it's sector performances in more detail. When you say they add value based on their view of the economic situation, how exactly have they added value in the last 8 years. I struggle to see it. The overall performance of the last 8 years give or take is weak seemingly across the board. They are also 4th quartile in their flexible sector which is a sector that also tries to add value based on market situations Comparisons by them to FTSE All Share is somewhat stupid. Comparison to a global equity index less so but omitted by them. I do wonder how their global equity compares to global indices, how their UK equity compares to UK indices and their bonds to index bonds. i.e. like for like. That may show some value add, though I expect not recently. Mixing it all together just muddies the water, and picking and choosing bits or using apples and oranges comparisons doesn't inspire confidence. I only hold one fund in the UK I'd compare to RICA, being in the strategic assets category, which is Artemis Strategic assets. It's also been a little bit disappointing to be honest, but it's 5 year performance at around 37% or 7% p.a. is acceptable/passable given it's lower/moderate risk compared to an equity only fund. It's objective is also a bit clearer than RICA. Unfortunately it only launched in 2009 so we can't really compare what happened in the GFC yet and need to wait for the next crash Worst 12m rolling period is -2.6% compared to -7.5% for RICA, and best 18.4% compared to 12.3%. Total 5 year 37% vs 25% Discrete rolling 12m periods A Artemis Strategic Assets I Acc 13.1% 2.5% -2.6% 2.6% 18.4% B Ruffer Investment Company 4.0% 4.9% 10.4% -7.5% 12.3% Once the GFC numbers drop out of the 10 year performance period, the larger questions will also loom even larger for RICA. I guess then they will quote since inception instead It really does need markets to crash to have a chance of looking decent again. BTW You mentioned when markets crash and sterling rises you think it would outperform. A crash may help. However, if sterling rises it's global equities will be a drag as it has around 30% global equities and just under 10% sterling equities. Also it has a large holding in US Treasury TIPs. The exchange rate risk it is taking doesn't support a view on sterling rising. So they need a crash + further falls in sterling. Edit: Actually just thinking about it, I wonder how much of the funds return in the last 5 years has come from the devaluation of sterling? Would be interesting to better understand their 25% in 5 years. Do the annual accounts break this sort of thing out? GBP is down not far from 20% in 5 years vs USD which will have enhanced their gains. Also a significant devaluation vs EUR will have boosted gains. Stripping out the FX, one has to wonder what they actually made their money on? {The FX element is a big factor way the FTSE All Share looks weak compared to FTSE world ex UK}.
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Post by rgs2001uk on Aug 22, 2017 16:16:38 GMT 7
You must have balls and nerves of steel to feel comfortable buying a single share offering, it puts me through grief trying to figure out which fund to buy and that's something that's actively managed by knowledgeable folks and contains multiple share offerings spread across a wide geographic range. I wouldnt advise anyone to follow my approach to investing, its not for the faint hearted, and certianly not for widows and orphans. I got involved with stockbrokers years ago, had built up enough in ITs. With ITs is easy enough, just get the divi reinvested. With stockbrokers the divi isnt automatically reinvested, so builds up in my cash account. Years ago I had a spread of stock in the usual sectors. As my knowledge and understanding improved rather than just reinvesting the divi in the same stocks, I started looking at alternatives shares to invest in, either in the same sector or another sector. I started looking at some of these ITs and their top 10 holdings, I then cherry picked their best performers and ignored the others, dependant on the sector I wanted to invest in.
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Post by rgs2001uk on Aug 22, 2017 23:06:43 GMT 7
CM, FYI, my stockbroker account, 2010, after surviving the Barclays Wealth Management account fiasco and changing stockbroker Cash, 3% ITs, 19.6% Financials, 13.9% Consumer Goods, 7.7% Health Care, 7.2% Consumer Services, 3.0% Telecomms, 3.9% Utilities, 7.2% Resources, 33.5% Todays breakdown of sectors. Cash 2.4% Global Equity Funds 34% Consumer Goods 23.3% Health Care 6.2% Consumer Services 3.7% Technology 4.9% Polar Capital Technology Trust Utilities 2.8% Oil & Gas 9.0% Basic Materials 6.0% Ftse, 2010, 5757 Ftse 2017 7294. The above didnt come for nothing, realigning the portfolio etc etc, having, "balls and nerves of steel" played a part, knowing what to keep and what to offload played a part. The above is for informational purposes only, should you wish to invest in worthless paddy fields upcountry have at it, no worries soon Japanese and Korean companies come buy up everything, .
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chiangmai
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Post by chiangmai on Aug 23, 2017 5:05:02 GMT 7
As discussed previously and to fill in the gaps: I met with UOB yesterday and opened an investment account with them, it seems you'll need a separate dedicated UOB savings account to feed any investment purchases. All investments can be traded online, separate from their online consumer banking system. Minimum opening balance for the savings account is 50k baht, minimum investment purchase is 2k baht with no upper limit. The account is not taxable, instead, a 1% exit fee applies. Note: they are quite happy to fill out the risk questionnaire for you in order to ensure your score exceeds the threshold needed to open the account which I thought was very accommodating, cough cough.
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AyG
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Post by AyG on Aug 23, 2017 7:07:02 GMT 7
The account is not taxable, instead, a 1% exit fee applies. Pretty sure there've been some misunderstandings there.
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chiangmai
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Post by chiangmai on Aug 23, 2017 7:16:48 GMT 7
The account is not taxable, instead, a 1% exit fee applies. Pretty sure there've been some misunderstandings there. And that was my thought as we were sat talking about this hence I queried the issue up one side and down the other with three separate people and got the same answers. I did however fire off an email after our meeting, to head office and asked them to confirm - I have yet to receive a reply. EDIT: just looking at the SET/Thai tax regs and they state that (personal account) equities are exempt from capital gains whilst dividends are subject to 10% withholding - interest is of course is subject to 15% with holding. So if the dividends are reinvested.......! www.set.or.th/en/regulations/tax/tax_p1.htmlAccording to The Revenue if the dividend has been taxed at source (10%) the account holder can elect not to have that credited to personal income tax, in which case no deductions are allowable. www.rd.go.th/publish/6045.0.htmlI'll wait for the reply from UOB H/O but it looks as though UOB pays the tax on the dividend and the customer cannot take a deduction for the fees.
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chiangmai
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Post by chiangmai on Aug 23, 2017 9:02:10 GMT 7
This is going to be one of those days, I can tell!
UOB H/O replied and confirmed that CG-LTF involves no tax....whatever that really means.
But then they said, CG-LTF does not suit you, it's for salaried employees only, you need TEF which is similar.
I sense a trip to Bangkok in my near future.
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AyG
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Post by AyG on Aug 23, 2017 10:18:59 GMT 7
LTFs have tax advantages*, so they're good for people paying income tax here. However, you most certainly don't have to be employed to buy one. Normally you have to hold them for 5 years to keep the tax advantage. If you're a non-tax payer, then I can't offhand think of any issues with selling them sooner. Perhaps someone else can comment. CG-LTF has outperformed TEF quite significantly over the last 10 years. I guess excluding the more dodgy companies from the portfolio does some good to performance. Here are the Morningstar pages for both funds. tools.morningstarthailand.com/th/snapshot/snapshot.aspx?id=F000000RG3tools.morningstarthailand.com/th/snapshot/snapshot.aspx?id=F000000RG5(Google Translate may be of use here.) Both funds have identical (and outrageous) TERs at 1.76%. (Have you checked performance of the funds against a much cheaper SET50 ETF?) Incidentally, you mention contacting UOB Head Office. I do hope this isn't what you meant. You should be contacting UOB Asset Management for all fund-related queries. * I suggest you search here for LTF. I'm pretty sure that Fletch has gone into considerable detail on the subject of their tax advantages.
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Post by Fletchsmile on Aug 23, 2017 10:52:49 GMT 7
LTFs have tax advantages*, so they're good for people paying income tax here. However, you most certainly don't have to be employed to buy one. Normally you have to hold them for 5 years to keep the tax advantage. If you're a non-tax payer, then I can't offhand think of any issues with selling them sooner. Perhaps someone else can comment. CG-LTF has outperformed TEF quite significantly over the last 10 years. I guess excluding the more dodgy companies from the portfolio does some good to performance. Here are the Morningstar pages for both funds. tools.morningstarthailand.com/th/snapshot/snapshot.aspx?id=F000000RG3tools.morningstarthailand.com/th/snapshot/snapshot.aspx?id=F000000RG5(Google Translate may be of use here.) Both funds have identical (and outrageous) TERs at 1.76%. (Have you checked performance of the funds against a much cheaper SET50 ETF?) Incidentally, you mention contacting UOB Head Office. I do hope this isn't what you meant. You should be contacting UOB Asset Management for all fund-related queries. * I suggest you search here for LTF. I'm pretty sure that Fletch has gone into considerable detail on the subject of their tax advantages. Yes my wife holds CG-LTF and has made purchases without being a tax payer. I've always made as a taxpayer. You can also buy more than the 15% of salary/ 500k max limit in a year too, just you don't get tax relief on the excess over your limit. I've done that also For LTFs purchased between 2016-2019 the holding period is now 7 calendar years. So a purchase on 30 Dec hold for 5 full years and a sale on 2 Jan would achieve this if someone was looking for a minimum holding period of 5 years and a couple of days. Prior to that was 5 calendar years, which could be 3 full years and a couple of days either side. The fees are quite high. Not outrageously so at 1.76%, when you consider what you're getting. The fund has consistently been top 10 (often top 3 or top) in long term performance charts since its launch. It's superior to every other offshore trust/ IT I've seen. Offshore choices are severely limited. We've covered this in the past but something like Aberdeen New Thai IT has been one of the better ones until recent years, but has some severe drawbacks. Particularly around liquidity and an unpredictable and volatile discount to NAV. Its performance is also inferior. ANTIT has a total expense ratio of 1.39%. So has been well worth paying an extra 0.37% for CG-LTF compare to the investment trust. Yes, TEF is inferior to CG-LTF in my view and its performance consistently lower in recent years, although in days gone by was closer to CG-LTF Here's a thread recently comparing to the longest running Thai ETF, showing CG-LTF's superior performance. bigmango.boards.net/thread/10963/performing-thai-long-equity-fundsI would note out-performance generally of this an other of the best funds seems to have been gradually narrowing vs the index/ETF in the couple of decades I've been investing in Thai equity funds in Thailand. As AYG says. Not sure why UOB are comparing exit fees to potential tax benefits. The two things are totally different. For a tax payer you get tax relief on the higher of of 15% of your salary or 500k. The LTF is also capital gains tax free if you hold for the relevant holding period. Dividends you can choose to pay a flat 10% WHT or WHT at your marginal rate of tax which could be zero to 35%. Whether an exit fee is levied or not though is at the fund manager's discretion and totally unrelated to tax treatment
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chiangmai
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Post by chiangmai on Aug 23, 2017 12:15:09 GMT 7
It's slightly disturbing that UOB has been unable to set out all of the details of this product as succinctly as you've been able to do here, I wonder how much of it all is translation and assumption related rather than anything more sinister, I'm going to give them the benefit of the doubt on this. And yes, by H/O I refer to UOBAM.
But I suppose that what they told me initially is actually correct, the product is tax free as far as I and they are concerned, what they've not gone on to explain is the seven year holding aspect nor the tax benefits of payroll deduction, but there again they know I'm retired hence why would they. The one percent exit fee - I now presume that's nothing more than another piece of information thrown in but not necessarily in the context of what was being discussed.
As for the recommendation towards TEF as an alternative.........who knows! I guess that's why in the UK we have rules about who can provide financial advice and who can't, just so that consumers don't end up being given crap advice by people who don't really know. But this is after all Thailand and not the UK hence we know to take everything with a pinch of salt and to triple check it all.
As always, many thanks for your guidance and assistance.
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Post by Fletchsmile on Aug 23, 2017 12:35:41 GMT 7
As I remembered UOB had an OK website for outlining some of the LTF rules. I did a quick search as website pages move around. It's here now: www.uobam.co.th/en/tax-benefit/ltfThey also have a manual for investing but all in Thai which can be downloaded on that www.uobam.co.th/srcm/tax_benefit/mjpksbjll/sb/jl/o0x0/%E0%B8%84%E0%B8%B9%E0%B9%88%E0%B8%A1%E0%B8%B7%E0%B8%AD%E0%B8%81%E0%B8%B2%E0%B8%A3%E0%B8%A5%E0%B8%87%E0%B8%97%E0%B8%B8%E0%B8%99-LTF-AIMC-28-Aug-2015.pdfWe've also a few other threads on this on Big Mango Just to emphasise though LTFs are not always "tax free": - Capital gains tax if held according to the rules = yes tax free - Dividends not necessarily free from income tax/ witholding tax if you select a dividend paying LTF. Dividends suffer withholding tax at either 1) Flat 10% or 2) your marginal rate of tax. What we've tended to do is if not a taxpayer in the year, then ask the fund provider to change the set up so no WHT is deducted. If you have enough tax allowances then this covers any tax liability so your marginal rate is zero. But when working and paying tax at say 35% it makes sense to switch back to the flat 10%. It's your choice and you can choose each year. Two steps: i) get your provider to change whether WHT tax is deducted at 10% or not ii) possibly add in as income on your tax return if you need to do one. If you went the 10% flat method you just exclude it, if the no WHT method you include it as income - Inheritance tax - I believe it is just another asset like any other. So if you need to pay inheritance tax in the UK or in Thailand then it's part of your estate
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GavinK
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Post by GavinK on Aug 23, 2017 13:57:40 GMT 7
Re funding UOB investments only via UOB account :
That wasn't the case when I opened with UOBAM a few years ago - ins and outs via non-UOB account all fine, and same with TMB AM except outs and div payments have to go to a TMB account. But having said that, recently letter from TMB AM arrived all in Thai which I reckon says after X Sept 2017 all ins and outs have to go via a TMB account only. I'll have to call in at a branch and confirm.
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AyG
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Post by AyG on Aug 23, 2017 14:07:07 GMT 7
Re funding UOB investments only via UOB account : That wasn't the case when I opened with UOBAM a few years ago - ins and outs via non-UOB account all fine, and same with TMB AM except outs and div payments have to go to a TMB account. But having said that, recently letter from TMB AM arrived all in Thai which I reckon says after X Sept 2017 all ins and outs have to go via a TMB account only. I'll have to call in at a branch and confirm. I think you've misread the TMB letter. From September you won't be able to add new non-TMB bank accounts, but you can keep existing ones for all cash-related transactions. (Incidentally, dividends and withdrawals don't have to go via a TMB account, they can go to any linked bank account. I don't have a TMB bank account, but do have a TMBAM account and it all works fine.)
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