Last week members of the Treysta advisory team once again headed to New York to take part in the latest study tour organised by Implemented Portfolios. Participation in these events represents a significant investment by the Treysta business. We believe the returns to both the business and its clients are exceptional as we strive to deliver global best practice client solutions. This short blog highlights that the lessons of the GFC should not be forgotten, at Treysta our investment philosophy has evolved but many have not.
Going back several years to the inaugural study tour our primary objective was to understand the critical elements that wealthy US clients wanted from their investment services. We found a large degree of consistency the key themes were:
• I want to see and understand what investments I own.
• I would like to be able to get my hands on my cash when I need it.
• I would like some degree of control over my investments.
US investors were weary of complex investment structures, they had become uncomfortable not knowing exactly what they owned in their portfolios and there were frustrations if they couldn’t get their hands on their money when they needed it.
Guess what? These were almost exactly the same concerns and experiences that Australian investors were voicing. Unfortunately a full six years on from our initial study tour many investment services still do not deliver on these key client concerns. Seemingly, advisers and investors have not learned the lessons of the GFC and Australian investors are still getting caught up in investment products that implode because of their opaque nature.
Last week in the Financial Review and The Australian there were reports of further closures in the VanEyk Blueprint series of Managed Funds. The problem that led to the fund closures hinged on an illiquid investment made by a remote third party manager called Artefect, a UK based Hedge Fund. I doubt whether many Australian investors in the funds had ever even heard of Artefact until news of the fund closures broke and more worryingly it’s highly probable that most of their advisers hadn’t either.
I don’t think it’s too strong to suggest that investors are cautious when it comes to managed funds, the Van Eyk issue demonstrates just how difficult it is to retain control of these complex environments once investors’ cash disappears down the funnels of various third party investment managers.
Tips to avoid the pitfalls:
• Do not invest your money where you do not have full view in terms of where your money will be invested.
• Make sure you have a degree of control and can instruct your investment manager not to buy something if you don’t like it or do not understand it.
• Don’t be the one at the end of a long queue trying to get your cash out of a fund, insist on liquidity (access to your cash if you need it).
There are many investment alternatives to managed funds available to Australian investors we at Treysta would be delighted to help you understand what they are. If you have any questions or stories that you would like to share with us we will gladly respond.