New Ireland Protected Assets Fund

I posted something like this already on a different thread as only joined site today and was still figuring out how to start a thread myself. Like many other people I have kept money on deposit in the banks but the rates are so low that this does not seem to make sense anymore as it is not money I need to use for a few years. I had my fingers burned by investments in the past but think that I need to go back in for long term planning. One broker I went to for advice seemed very keen to nudge me towards investing New Ireland's Protected Assets Funds which takes about having a security feature that the fund will never fall below 90% of its highest value in any year. However I do not know if the charges/commission on this are very high and from looking around AAM there seems to be a general caution about funds that offer guarantees in that they often seem to never deliver true growth. I don't know if people can comment on an individual fund like the Protected Assets Fund, but, if they can, does anyone more experienced know anything about it or can they steer me - like the poster above - in the direction of wise and unbiased advice? The other fund I was steered towards (but by an in-house investment manager in Bank of Ireland) was the BNY Mellon Global Real Return Fund which seems slightly higher risk but its performance was being greatly praised. Would anyone have any advice re hidden icebergs lurking on this one. Up to now my version of investment risk was getting mugged on the way to the post office to put money with An Post, which no longer seems like a good idea either.

Donal, you appear to a fairly clued in kind of person. Take a little time and do some research on ETS. These kind of instruments have far lower costs than funds. There are thousands of different types of these available. It will take some time doing research but realistically will get you away from the vultures working on commission to sell you product. And based on what we all know now, the Banks really didn't do such a wonderful job looking after their own money, what makes you think they will do a better job with yours.

Have a quick look at this link: [broken link removed]

DO YOUR OWN RESEARCH

Donal

The Protected Assets fund is quite complex and very difficult to understand. There's a lot more to it that the value will not fall below 90% in any given year. Have a read through the small print. If you don't understand it, don't invest in it.

The BNY Mellon Absolute Return fund isn't a bad fund but has the person in the bank done anymore than just these fund out of thin air?

It is very important that you get an investment portfolio that suits your goals and needs. If you are going to use an adviser, make sure they actually do more than process some paperwork.


Steven
www.bluewaterfp.ie

Hello to Mercman and SBarrett, thanks indeed for taking the time to post those replies which I greatly appreciate. They answer some questions that I had asked and more importantly lean me towards other questions that I should be asking. I'm grateful for the advice and will look into the whole ETS area which, rather like Einstein's Theory of Relativity and Fulham's continued survival in the premiership, is a total mystery to me.

Donal, If you are looking at the other types of investments, they are Exchange Traded Funds, (ETFs). Apologies for getting it wrong previously. Good luck with what your choice of investment.

In my view, protected funds, that offer a guarantee of capital, are a complete waste of time and money. I understand they are big sellers in Ireland, but I believe that is because there is a lack of understanding among investors about what one is trying to achieve when investing.

Guaranteed funds have, by their nature, extra costs in them to provide the guarantee. But if you own a balanced fund, one that is properly balanced across the asset classes of equities, long-dated bonds, bank deposits (or short-dated bonds), precious metals and hedge/absolute return strategies then you are covered for the four economic conditions that you might face.

Equities (and property) deliver when we have prosperity, which has been the norm for over 200 years albeit interrupted by recessions from time to time (and a depression in Ireland this past 5 years). Long-dated bonds protect you in times of deflation. Precious metals excel in inflationary conditions and bank deposits are normally best in recessions as interest rates are normally rising then (but not always).

In Ireland, my experience is that balance funds from the life companies are skewed towards equities so that they are not truly balanced. That's not a major negative so long as you understand the implications.

Adding a guarantee to a balanced fund simply loads on further costs. In a country where knowledge about long-term investing and confidence in the financial services industry are low, guaranteed products work well for the seller, but not the buyer. For as long as the Regulator allows intermediaries (Insurance Brokers etc) to earn upfront commissions on investment products then the eager seller will continue to sell inappropriate solutions.

I have a Featured Article on my website, which is accessible to subscribers to GillenMarkets.com as well as non-subscribers, which might assist you learn a little more on the area.

[broken link removed]

There are lots of other articles in that Free area of our website. You can search around.

Rory Gillen
Founder, GillenMarkets

Good post Rory.

I absolutely detest protected/ tracker protects.

I took on a new client who has a considerable sum of money invested in a tracker. The fund is up 22% since inception, a super return. But the client can't take his money out until September 2015. He is delighted with the return and the fund has done what he wants it to do but he would prefer to cash in his chips at this stage. Instead, he now has the risk that if the markets crash between now and September 2015, he'll just get his money back.


Steven
www.bluewaterfp.ie