# Irish Life - Technology QLD January Returns



## Scanner (11 Feb 2013)

Hi,

I just logged on to my Irish Life (Quinn Life) account and see that last months returns for the Technology OLD was -1.32%.

The Nasdaq was up approx 12 % in January.

Am going to ring Irish Life to enquire but just thought id post here first to see if I am missing something obvious ??

If anybody can explain the difference to me, please do.

Thanks
Scanner


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## jpd (11 Feb 2013)

Euro/$ rate changed from 1.32 to 1.37 (+5%) from 1/1/2013 to 31/01/2013.

Does that explain it?


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## Scanner (11 Feb 2013)

Hi JPD,

Thanks for your reply.

Even at that it should still be up around 7%.
I'm just confused that there is such a difference between approx -1 % to + 12 %

Scanner


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## 3CC (11 Feb 2013)

There have been a few posts here on AAM in the past about QL funds appearing to make unexplained deviations from the indices which they track.

I had a look at this tonight and based on the data I can get a hold of, there does seem to have been an issue.

It will be interesting to see if IL do a better job.


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## ashambles (12 Feb 2013)

I’d guess that the fund isn’t tracking NASDAQ. Though I’ve no idea what it’s supposed to be doing, is there any information sheet on Quinn/Irish Life about it?

NASDAQ keeps reweighting large companies, so that they don’t have too much significance on the NASDAQ. They don’t want stock movements in one company having too large an effect on the index. A fund could be much simpler and might own something like the 10 largest companies on the NASDAQ.

Apple was down around 20% in January and is a large component of many Irish funds so I’d guess that and the weaker dollar is responsible for the sub NASDAQ returns. (I realize discussion about stocks aren't allowed - but this comment hopefully falls within the guidelines.)


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## PMU (12 Feb 2013)

ashambles said:


> I’d guess that the fund isn’t tracking NASDAQ. Though I’ve no idea what it’s supposed to be doing, is there any information sheet on Quinn/Irish Life about it?)



 You should have received in June 2012 a document from QL titled ‘Policyholder circular with respect to a scheme for the transfer of part of the life assurance business of QL to IL”. It was marked “This is an important document”.  The document provided details of the IL funds into which the QL funds would be transferred.  



On the IL Nasdaq fund the document states the IL fund  “aims to to match the average returns of all the shares that make up the Nasdaq 100 index”.  This, to me, isn’t index tracking.


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## 3CC (12 Feb 2013)

I just did a quick check on the QL Euro fund. I plotted the QL values (which I had to take manually from the My Online graphs) against the Eurostoxx 50 value for the same dates. I just did this for 17 dates from early 2008 to end of 2012 (c 4 month intervals).

As the QL fund value is not the same as the EuroStoxx 50 value, I normalised the QL value to be equal to the Eurostoxx 50 at the start of the graph.

See the results here.

[broken link removed]

It seems that QL have outperformed the index by c. 15% over the period which is mainly a falling market. I wonder if this could be due to some of the fund being held in cash and that in a rising market there would be a corresponding under-performance.

It's a bit frustrating that we have to 2nd guess all this rather than IL just being clear about what the funds are in. 

To be fair to IL, the fund and the index seem to be quite closely aligned since IL took over QL. Maybe they have changed strategy?

Personally, I do not like the lack of openness and I am considered a self directed PRSA with ETF's.


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## Eeyore (12 Feb 2013)

The outperformance against the Eurostoxx 50 could be due to dividend reinvestment within the fund. An annual dividend of around 2.5% reinvested could explain the increase against the index over the period.


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## PMU (12 Feb 2013)

3CC said:


> I just did a quick check on the QL Euro fund.
> To be fair to IL, the fund and the index seem to be quite closely aligned since IL took over QL. Maybe they have changed strategy?



This was a bit of a waste as the IL fund to which the QL Eurostoxx50 was transferred doesn’t track the Eurostoxx50 index.  The aim of the IL Euro fund is to track the average of all returns that make up the FTSE Europe ex-UK index.  This gives rise to various problems.  For the investor it’s not exactly transparent as you don’t know from when the returns are calculated, e.g. is it from the date the QL fund was transferred or is it from the date the index was last revised / set-up/ etc. (although I’m certain IL will tell you if you ask).   This makes performance monitoring difficult if not impossible.  Also this index while Europe ex-UK is not a eurozone index. The top 10% of the holdings currently are Swiss (and there are other European but non-eurozone equities in the index) so you are now exposed to exchange rate risk to which you were not exposed with the QL fund.  It also means you have a greater allocation to non-euro denominated equities than you previously had with the QL fund.


From what I can see, the IL Biotech, Latin America, Emerging Markets, China and Clean Energy are index tracking funds (i.e. they aim to track the performance of an index).  The others "aim to match the average return of all the shares that make up" the index in question.


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## 3CC (12 Feb 2013)

Hi Eeyore. I have redone the graph against the EuroStoxx50 total return and it looks like this

[broken link removed]

This is looks better with the QL fund slowly slipping below the EuroStoxx 50 total index which you would expect due to the AMC.

However, the 1% AMC compounded over the 5 year period in the chart should be ~5.1%. The actual error that I see is 8.36%. (I can supply the numbers I am using if anyone wants them.)

This implies an actual AMC of 1.73% which is a lot less attractive. Note that the time period I am looking at is when the fund was with QL and therefore the EuroStoxx 50 Total is the appropriate index to compare against. I do not think there has been enough time since IL took over the fund to do the same exercise reliably.

I am inclined to think that the AMC quoted for these funds is only part of the story.


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## mercman (12 Feb 2013)

Not to ride over this thread, but why do people invest in funds like these which have exorbitant Management Charges which are only part of the story. The real story is the TER (Total Expense Ratio) which Irish funds are not obliged to give to investors.

In any case existing Investors should have a look at ETFs (Exchange traded funds) which are less penal on Investors concerning costs, but are completely transparent in relation to costs.

Over a five to ten year period, Management charges eat up a large chunk of profits in any fund.

I am not a broker, but after going through the proverbial, hate to see others getting ripped off.


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## 3CC (12 Feb 2013)

Hi Mercman,

I agree. I think many people went with QL 5-10 years ago when ETF's were not as well known. 

Personally, I am looking at transferring my old Quinn Life pension with Irish Life to a self directed PRSA. Ironically, Irish Life might be the best choice for this, although they have yet to call me back to confirm charges/details etc.


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## mercman (12 Feb 2013)

3CC, for what it's worth I moved mine to Friends First who are very cost effective. I have no ties with them and only went to them because they were recommended to me. To be honest, it any institution haven't got the manners to call you back, take your business elsewhere. IMO


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## Scanner (13 Feb 2013)

Hi Folks,
Thanks for all the replies, im waiting on IL to get beck to me but it looks like im stuck in this fund (funds) for the time being.
I had originally invested 65000 approx 7 years ago and am currently at approx 57000 so need to sit and wait untill it gets back to 65000 and then I will be taking it out and buying ETF's instead.
When IL come back to me I will let you know what they say.
Scanner


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## 3CC (13 Feb 2013)

Hi Scanner,

I know there is a strong instinct to hold on with IL but the only reason to hold on until the fund reaches the value to put in originally is psychological. 

If you transfer to different pension with lower charges and invest in the same underlying indices as your are are present, you will get back to your staring point more quickly. IMHO.

3CC


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## Scanner (13 Feb 2013)

Hi 3CC
Thanks for your comments.
Its not a pension as such, its an investment I made
With spare cash.
The problem I have now is if I take it out and reinvest I will be
taxed on the profit I make up to 65000, where if I leave it as 
is I won't pay tax untill I go over 65,000.
Scanner


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## 3CC (13 Feb 2013)

That's true.  Probably makes sense to cash out when you break even.

How long do you have the fund?


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## Scanner (13 Feb 2013)

I have it over 7 years now. I was down to around 38,000 at one stage
but it has made a recovery. I was glad to be honest when they
move it from QL, I was fearful I'd wake up one morning and 
it would all be gone with what was going on with Quinn, but I can't
help feeling I don't have what I thought I was investing in now :-(
Scanner


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## Scanner (19 Feb 2013)

Hi,
Irish Life came back to me with this reply

"In relation to your query the Quinn Life Technology fund uses the Nasdaq index as a benchmark however the value of the fund is not directly affected by this.
The reason for this is that fund would be invested in different areas of the technology industry and because of this your value can rise or fall depending on market performance."

Which does not really answer my question why there was such a difference between -1.34% and +12% and confuses me when im told "your value can rise or fall depending on market performance"
Considering market performance was very good in January and im down -1.34% what would happen to the fund if the maklet was actually down.

I have replied back to Irish Life asking.....
" My understanding when I bought this fund was that it tracks the Nasdaq and now I am being told it does not. This is not good.
Even so, the difference between -1.32% & 12% needs an explanation.
I am sure you will agree that there's not much point in being in a fund if you dont know what your investing in.

Can you give me a breakdown of what the fund was invested in in January please"

I will let you know their response.
Scanner


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## 3CC (19 Feb 2013)

I have also contacted Irish Life to ask them what their tracking error is. I accept that some of their funds are not pure trackers but for the ones that are, I would expect a reasonable tracking error.

Irish Life do not seem to be adding any value to the process. Scanner, would you be interested in selling out of your IL investments and give the money to me. I'll charge you 1% and then invest it in an ETF tracking the index of your choice. I'll even fill out your tax returns for you. You will get a fully transparent investment with a small tracking error and I will get about 0.5% margin every year.

Of course I am joking but it makes you wonder what you are paying for.


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## Scanner (19 Feb 2013)

Nice one 3CC...

I am no economist or financial wizard but the least I expect is to be able to track my investments.  I invested in the QLD Technology fund which was supposed to track the Nasdaq. Now I have no idea what im invested in, but the bit that really worrys me is how am I supposed to make money when the market is up and my fund goes down.  I appreciate Apple (for example) was down 20% in January but the whole point in investing in a so called Index tracker is that you are diversified in that index. Who's to say Irish life has invested my money in 10 shares from the Nasdaq, Apple being one of them and has a 70% weight.  This is not what I want and not what I asked for.!!
PMU said that I should have got a document marked “This is an important document” from Irish Life, I moved house and never got this.
Did we have a choice of funds to transfer our investments into ?  My understanding was our funds would be invested in the same type of Irish Life Fund.
If the funds are not the same, thats not good as basically Irish Life can do what they want with our money.
Im interested in what there reply to my last mail will be.
It better make sense or I may lose the plot with them.
Scanner


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## PMU (19 Feb 2013)

Am I the only policyholder who got these documents?  

  On I June 2012 QL wrote to all policy holders enclosing a Policyholder Circular and a Summary of an Independent Actuary’s Report.  They were required to do this by the High Court.  The circular provided information on how the transfer of QL policies to IL would take place and the actuary’s report was his assessment of the likely effects of the transfer on the longterm policy holders of QL.  In his report the actuary states that ”_1.88 ILA has mapped the QLD internal unit-linked funds to comparable ILA internal funds.  These do not replicate the QLD funds exactly in all cases.  These differences have been explained in the policyholder circular.  I am satisfied that QLD policy holders’ reasonable expectations will not be materially adversely affected by the fund mandate differences_.”   

  Personally, I must admit that I did not at that time pick up the point that some of the new funds were not index trackers but instead aimed to match the average returns of all the shares that make up the [benchmark] index.  And it now appears that performance monitoring for the non-index tracking funds is difficult.  Also as these funds are not being marketed I doubt a prospectus exists. 



There was no debate on AAM in June 2012 when the transfer took place.


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## Scanner (19 Feb 2013)

Hi PMU,
Thanks for your response, your time is appreciated.

While I have not read the document (yet) I would make two points.
1) How can someone else decide to move your investment from one fund to another
    without making sure it was replecated exactly.
    If IL were happy to take our investments (and mgmt fee)then they should 
    have been made to ensure the funds that they were moving to were the same.
2) _I am satisfied that QLD policy holders’ reasonable expectations will not be_
_    materially adversely affected by the fund mandate differences_.” 
    Is the actuary saying here there should be no difference in the funds
    performance ?
    From 12% to -1% is not only a difference it's a disaster.

Does anyone know if the regulator was involved in this transfer ?

Like you PMU, I knew the transfer was happening but I expected IL to transfer my funds into a like fund.
This does not seem to have happened which is very frustrating.

Scanner


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## 3CC (19 Feb 2013)

I have to admit that I did receive correspondence regarding the changeover from QL to IL. I scanned the document and saw a table showing that there were no major changes between the funds before and after the changeover. I don't think it was possible at that time to predict that the minor changes would effectively make it impossible to monitor performance of some funds.

Having said that, I have monitored performance of the QL funds prior to them being transferred to IL and they leave a lot to be desired. So we have moved from QL who had a high (and consistently negative) tracking error to IL who we cannot monitor for tracking error.

Whether it is in the terms and conditions or not, I think it is perfectly reasonable for IL to tell me what each fund is invested in and also publish the tracking error (for both the index tracking funds and the funds that track a basket of shares).

There are too many other alternatives that are more transparent to stick with IL if they do not meet this simple request. 

BTW, I would be interested to know if QL effectively novated the investment contracts to IL (in which case IL will still be liable to investors for any past breaches by QL) or if IL offered new replacement contracts under differerent terms and conditions which would probably limit their liability prior to the changeover.


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## Scanner (22 Feb 2013)

Hi, 

Irish Life responded to my email.   This is there response.


"In relation to your query, part of your overall investment is invested in the Technology QLD fund and therefore the overall value of your plan will be affected by all 3 funds that you are invested in.However, not all of your investment would be impacted by the index i.e. if the index is up by +12% this is does not mean that the value of your plan will increase by that percentage. As requested I conducted an asset split to determine what exactly the Technology QLD fund is invested in and I found that the only asset it is invested in is the NASDAQ 100 E-Mini.  In order to provide you with an idea on how the Technology QLD fund has performed over the month of January I have outlined the different valuations of different pricing dates over that month.  
Amount of Units    Unit Price    Date           Value
19,935.92            1.06           02/01/2013  €21,132.07
19,935.92            1.062         10/01/2013  €21,171.94
19,935.92            1.054         18/01/2013  €21,012.45
19,935.92            1.028         31/01/2013  €20,494.12
19,935.92            1.048         20/02/2013  €20,892.85

 I would recommend consulting with a financial adviser if you require financial advice in relation to your plan."

Found this index http://quotes.ino.com/exchanges/contracts.html?r=CME_NQ
Im finding it difficult to find out the returns for January for this.
Does anybody know anything about the NASDAQ 100 E-Mini. 

Scanner


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## 3CC (22 Feb 2013)

I have never heard of the emini Nasdaq 100 but from a quick google it seems to be a futures contract? I know nothing about futures contracts except that I do not want to invest in them as I do not understand them.

I would be a bit annoyed if I thought I was invested in an index fund and then discovered I was invested in a futures contract.


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## Scanner (23 Feb 2013)

Hi, yes it appears to be a futures index...
I know nothing about how these work either and yes I am annoyed now.

Is there anyone out there that can explain the emini Nasdaq 100 to me in simple language?

Thanks
Scanner


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## postman pat (23 Feb 2013)

Thiis quite interesting, i have been in contact with Irish Life over the last few days about switching funds etc,as you are unable to switch online as with quinn-life,i found them to be less than forthcoming about any questions i had as i too found the funds i am invested in are not doing good despite the fact that most markets are on the up at the moment, it reminds me of the PIPS and PEPS i had with AIB in the nineties that kept losing money no matter what the markets were doing.


 Pat


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## 3CC (23 Feb 2013)

I emailed them last Monday to ask them to confirm the tracking error for the funds I am invested in but no response yet.


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## Scanner (27 Feb 2013)

Hi Folks,

Is there anyone out there that can explain how an investment in the Emini Nasdaq 100 works ?

Thanks
Scanner


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## IL_CS (5 Mar 2013)

*Investment Performance - Plan v NASDAQ*

Dear Scanner,

I am a Team Leader in Irish Life Customer Service and have noticed your various attempts above to try to get an answer to your questions.  In order to do so, can I ask that you contact our Customer Service Team on (01) 704 1010.  Please select Option 3 - Savings & Investments and ask to speak with the Team Leader at which stage I will provide you with the answers that you seek.

Thanks,
IL Customer Service


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## SPC100 (11 Apr 2013)

Scanner, thank you very much for starting this thread. Previous threads had shown that Quinn Life was doing a decent job of tracking several of the indexes. We do need to do the same analysis for Irish life.

The summary of the actuarial report that was posted to all policy holders, said the following about this new Irish Life fund ;

Style of investing: Indexed. Direct investment
Benchmark: nasdaq 100

And in general it said that policy holders could expect the same returns that they were getting with Quinn Life.

Did you get the difference between your account and the nasdaq 100 performance explained?


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