Quinn Life SSIA 1 Year On

Fevernova

Troy,

I Really Hope Mithrandir Is Female.

Tolkien Rocks!!!

Not Alone

Troy,

Look here



and follow it through to here



If you have the time.

I haven't gone away you know

<!--EZCODE ITALIC START--> Rose<!--EZCODE ITALIC END--> thank me for those links. With the protestations of innocence and various intimidatory tactics, including impersonation and (thin) disguise, I was beginning to doubt my own sanity.

There is absolutely no doubt that there was a "Eurostoxx 50 brigade" headed by Mr. Eddie Hobbs (let's not be coy).

What a disaster that has been!

I have been accused of being confused in my arguments. Well at least I have C2H5Oh to blame.

The Eurostoxx 50 Brigade vary their defence wildly between arguing that it is too short a time to judge, to denial (on the basis that all index funds were promoted equally), to it is good enough for the small man whilst admitting it is certainly not appropriate for professionals like NTMA or Irish Life Pension clients.

Gloves are off here - I resent the dirty tricks having been carried into the public fora - someone must be really hurting to stoop that low.

I will keep up my attack until I get the moral victory of the shutdown of this thread.:mad

Campaign

Troy, I invested in an indexed fund. But that's not the point. You're claiming that people you've named headed a campaign to tell people like me and others that the Eurostoxx 50 and QLD was THE way to go for SSIA's. That simply isn't true, as published reports show.

The pasting you took was unfortunate, but justified because of the unsupported comments you made. Now based on the above links you're redigging the hole. If your last post is making a claim that cannot be supported with evidence, you should really withdraw it. I'm all for having a go, freedom of speech, and lively debates on matters, and I genuinely enjoy much of your input, but I don't think it's helpful to persue what appears to be an agenda against the people you've named thoughout this thread, without evidence. When you've evidence it's called stating a fact. When you none, there's a legal term for it.

Give It A Rest, Troy

Hi Troy,

That goes for me too, Troy. I've enjoyed debating with you both here and elsewhere on AAM, but you really do seem to have some other agenda going on here that is clouding your judgement. You've admitted that you've been reduced to posting views you don't actually believe yourself ! And certainly many of your comments have been way off the mark.

Just to be clear re EuroStoxx 50:
1. No one has produced any <!--EZCODE BOLD START--> scientific<!--EZCODE BOLD END--> basis for suggesting it was not a reasonable option.
2. It <!--EZCODE BOLD START--> is<!--EZCODE BOLD END--> too short a time to make a judgement on the success or otherwise of the investment.
3. <!--EZCODE BOLD START--> Most (all ?)<!--EZCODE BOLD END--> other market indices are also underwater for the period in question.
4. As are <!--EZCODE BOLD START--> most (all ?)<!--EZCODE BOLD END--> actively managed funds.
5. The one issue we do have categorial evidence for is that the <!--EZCODE BOLD START--> vast majority<!--EZCODE BOLD END--> of actively managed funds will underperform their relevant index benchmarks.
6. I certainly don't feel that the index was foisted on investors - it's a convenient, and currency matched, way of investing in Europe's largest companies, and was part of the package offered by one firm which was widely recommended because of its low charges. But there were <!--EZCODE BOLD START--> lots of other options available<!--EZCODE BOLD END-->, both from that firm and from others.

I and others have already dealt in more detail than I care to repeat with your disingenuous assertion that a view that "what's good enough for the small investor isn't good enough for large pension funds" somehow underlies all this, and, quite frankly, I think you have a cheek repeating it given the demolition it received last time, when even you yourself accepted at least some of the arguments.

Last Fling

Okay, Okay, <!--EZCODE ITALIC START--> Doggie<!--EZCODE ITALIC END-->, lots of valid points there.

Just one theoretical observation I would like to make, rather tangential to the main theme, but you have alluded to it several times.

The is no risk reduction in the Eurostoxx 50 just because we now use the same currency in Euroland for valuing shares amongst other things.

It is possible to get Euro denominated versions of many indexes which have nothing to do with Euroland.

The value of BMW is quite unaffected by whether we denominate it in Euros or Dollars or whatever. If it was denominated in Dollars we would have to do our calculation in two parts, (a) the $ change in BMW (b) the € change in the $ leaving us back where we started viz. the change in value of BMW in our currency, the €.

The illusion that because we have all switched to denominating things in the same currency we have somehow removed a risk is an understandable trap, and I do not suggest that the proponents of this myth do so disingenuosly. BMW is BMW is BMW no matter in what currency one prices the shares.:rolleyes

Risk reduction

Hi Troy

<!--EZCODE ITALIC START--> "BMW is BMW is BMW no matter in what currency one prices the shares."<!--EZCODE ITALIC END-->

Of course it is.

The currency risk from investing in BMW (or any other share) does not depend on the currency in which a BMW share is quoted. It depends on the currency in which BMW generates its earnings.

Investing in the Eurostoxx index (or any other Eurozone index) will reduce currency risk (as compared with investing in a non-Eurozone index) <!--EZCODE BOLD START--> to the extent that the companies which make up the index generate their earnings in Euros<!--EZCODE BOLD END-->.

I haven't researched this, but my expectation is that an index made up of companies whose primary listings were in Frankfurt, Amsterdam, Paris and other Eurozone exchanges would contain more companies whose earnings were mostly in Euros than an index made up of companies whose primary listings were in London or New York. Hence I would expect a Eurozone tracker to have lower currency risk (for a Euro investor) than a US or UK tracker. But I'm happy to be proved wrong. And I'm sure somebody's done research into the exposure to different currencies involved in investing in the major indices.

Currency Risk

Thanks, <!--EZCODE ITALIC START--> UDS<!--EZCODE ITALIC END-->, this one is far from simple.

I take your point, up to a point. But there is even more depth to this debate. Let's say BMW makes its profits mostly in Germany. Hence an investment in BMW is substantially an investment in the Germany economy.

The success of the German economy has absolutely nothing to do with in what currency we quote BMW shares, we both accept that.

But the success of the German economy has only indirect links to the fact that transactions in that economy are now denominated in the same currency as Ireland.

Undoubtedly the single currency has brought some mitigation of risk in investing in Euroland but not nearly so pronounced as first impressions would suggest.:smokin

What's this really about?

I think we're going around in circles. The Eurostoxx 50 is a valid index, just like any other latge stock index whether it's in the UK for UK investors or the US for US investors. It has a valid role to play in investor choice. But that's not the issue it appears.

Troy, why have you singled out this, and attacked it so inaccurately? What's the real driver or agenda? Are you trying to associate the fall in the European market to personalities you'd like to hurt?

It seems that you are. If so Troy, that's wasting everybodies time, has really no place here, ( move it to Letting Off Steam), and consider that really it's only damaging yourself. Being bitter does that.

Paranoia?

I have been considering that last posting by <!--EZCODE ITALIC START--> Falcontit<!--EZCODE ITALIC END-->.

To be sure, I have been attacking what was intensive populist tilt at conventional wisdom and the high personal profile associated with that tilt.

But since I have never met the person and I do not know him personally, talk of personalising the debate or trying to hurt someone or being bitter is way off the mark.

If that is the effect I am having on someone, then that's me finished with this thread - it was a mixture of fun and information but if people are getting that sensitive, it's run it's course.:rolleyes l

Currency Risk

Interesting debate as to whether currency risk has been removed from investing in top Euroland companies because of the single currency.

Assets range from purely monetary assets like deposits and bonds to totally real assets like gold, commodities or indeed real estate.

Clearly, monetary assets such as German Bunds have had a significant currency risk removed by the adoption of the single currency.

On the other hand the future value of gold is quite unaffected by whether it is purchased in Chicago in Dollars, Jo'burg in Rand, Frankfurt in Euro, London in Sterling etc.

Equities tend to be regarded as much more of a real asset than a monetary asset and so it would be largely true to say that no significant risk has been removed in investing in top European stocks by the arrival of the Euro. There was no currency risk <!--EZCODE ITALIC START--> per se<!--EZCODE ITALIC END--> in the first place.

Put another way, it is well known that, all things being equal, a falling currency causes a rise in stock prices and vice versa.

The fact that we are currently witnessing both a fall in the Dollar and a fall in Wall Street is because both are suffering from the same malaise. If say the Dollar had been pegged at its highs of a few months ago the fall in the stockmarket would have been even steeper because stock would have been quoted in an artificially high currency.

Anyway, why be a spoilsport, salsesfolk love to trot out that investment in EuroStoxx 50 carries no currency risk, and neither it does, but it never did, no more than investing in FTSE or S&P carries any long term currency risk. They all carry specific economy risk and since this also shows up in movements in currency it is understandable that the two get confused.

Currency Risk

Hi Economist,

I don't think it's as simple as your post suggests.

First of all, take real estate - the reallest (if you'll pardon the Americanism) of all assets. Quite clearly, the future value of real estate for a € investor <!--EZCODE BOLD START--> is very definitely<!--EZCODE BOLD END--> affected by whether it's located in Chicago, Tokyo, London, etc. There is no evidence that I am aware of that a falling currency necessarily causes real estate prices to rise. Perhaps that is because (a) all other things are rarely equal (ie there are usually extraneous factors involved), and (b) the real estate market is not global in the way that equities and bonds are.

Turning to equities, your proposition is that Nestle, for example, is a global company which happens to be headquarted in Switzerland, not a Swiss company, and that the currencies which impact Nestle's share price are those in which it earns its profits, not that in which its shares are denominated. A weak Swiss Franc will cause Nestle's overseas earnings to be more valuable, and will balance for an overseas investor any losses due to the weak Swiss Franc itself. (A Swiss investor will simply gain from the overseas profits.)

This sounds entirely rational. But unfortunately it's not borne out by evidence. Empirical studies have revealed a very weak correlation between equity prices and currencies in developed markets - pretty much zero, in fact, whereas you suggest there should be a strong negative correlation. (Equity prices and currencies are hugely positively correlated for emerging markets, and for bonds.)

It's perhaps not surprising that the correlation is weak in the short term. Again there's a body of academic evidence that suggests that stocks in certain categories of assets (eg based on capitalisation, industry sector, geography, etc) move together because of investor demand. This is probably exacerbated by the growth of indexation, where investors choose to buy or sell baskets of securities with little or no emphasis on fundamentals. You'd expect the rational argument which you advance to win out in the long term, though, as fundamentals (ie actual earnings) reassert themselves into stock prices. But it doesn't appear to be the case.

So Nestle behaves more like a Swiss stock than a multinational with a similar earnings profile. European multinationals behaved more like German, French, or Italian stocks than multinationals. And the advent of the Euro has indeed therefore eliminated at least some degree of currency risk for European equity investors.

How Real is Real

I accept this not simple <!--EZCODE ITALIC START--> Dynamo<!--EZCODE ITALIC END--> and I accept that the answer is not absolute, certainly in the short term.

Take Real Estate. Now if a currency completely bombed out, presumably the bricks and mortar would still be worth something. I accept that the Real Estate would probably fall in, say, its gold value in these circumstance but that would be because the syndrome which led to the currency collapse (e.g. economic meltdown) would also lead to the fall in the value of Real Estate - but I suggest it is an illusion to say that there was a currency risk involved per se just because the gold value of the currency and the Real Estate happen to be both highly correlated to economic performance.

Let's tease out this scenario further. Imagine the collapsed economy to be Spain. Pre Euro that would mean a bomb out of the Peseta and of Spanish Property in say dollar terms. In Euroland, the currency would be stable but the Property would bomb out anyway, now both in Euro and Dollar terms.

Turning to Nestle - it consists of machines and people and infrastructure etc. all real things with real values. Undoubtedly, Nestle's share price will appear correlated with the Swiss Franc but that is because they are both correlated to the efficiency of the Swiss Economy. This is a risk which is only very slightly reduced by Switzerland joining the Euro.

Equities are real assets dependent on the health of the real economy. A currency is merely a unit of accounting and transacting within that economy but as such the "value" of a currency when exchanged to other currencies is also highly correlated to the health of the underlying economy. But changes in the exchange rate of a currency are not a primary cause but an effect of underlying economic performance just as changes in equity vales would be an effect of economic performance. This creates the illusion that there is a substantive correlation between the equites and the currency rather than a mere statistical one. :hat

ssia

my gross amount investd with ql is 1078 closing balance 938 euros. eh should I WORRY i have another 2.9 ssia to go.

Re: ssia

The issue of whether to stick with equities or transfer, in full or just future contributions, to something "safer" like deposits or bond/cash funds is one that keeps cropping up. Have a read of the and in particular for some more background.

I presume you meant that you have 2.9 years to go on your SSIA until maturity?

How the 1% charge by Quinn Life works?

Let's take a look at Quinn Life's Eurostoxx 50 Index Tracker.

They say EXACTLY how the 1% charge bit works!

In January, I invest €400 into the fund on a day the unit price stands at €2.50 per unit. With no charge, I would be entitled to €400/€2.50 = 160 units. But Quinn Life place a daily charge equal to 1% of the unit price. This means that I will need to pay (€2.50 + €0.025) = €2.525 per unit. That's right, now I am only entitled to 158.416 units (€400/€2.525) for my €400.

In February, I again invest another €400 into the fund on a day the unit price stands at let's say, €3.50 per unit. With no charge, I would be entitled to €400/€3.50 = 114.286 units. But Quinn Life's daily charge of 1% of the unit price means that I will need to pay (€3.50 + €0.035) = €3.535 per unit. That's right, now I am only entitled to 113.154 units (€400/€3.535) for my €400.

In March, I again invest another €400 into the fund on a day the unit price stands at let's say, €4.10 per unit........and so on. You get the picture!

Now, instead of putting in regular payments of €400 per month over the 12 months of the year, I could decide to put in €4800 (€400X12) as a once-off lump sum payment at the start of the year (or indeed on any one particular day of the year that takes your fancy). For example, let's say I put in my €4800 into the Quinn Life fund on March 12th - a day where the unit price stands at say €2.90 per unit. With no charge, I would be entitled to €4800/€2.90 = 1655.172 units. But Quinn Life's daily charge of 1% of the unit price means that I will need to pay (€2.90 + €0.029) = €2.929 per unit. That means I am only entitled to 1638.785 units (€4800/€2.929) for my €4800.

I feel that it is very important to know EXACTLY how a fund imposes a charge on you. So when Quinn Life say they impose a 1% daily charge on the unit price, this is what I believe they mean. In other words, you get charged ONLY ON THE DAY OR DAYS THAT YOU DECIDE TO PUT MONEY INTO THE FUND as described above.

If the above is incorrect, please let me know!!

Thanks,
Auburn.

Re: How Real is Real

I don't think that is correct. Your description of the 1% charge is how things would work if it was a 1% bid-offer spread rather than an annual management charge. My understanding is that the 1% charge in this case is actually an annual management charge which is calculated on the full value of the fund. By "daily application" perhaps they mean that they calculate the 1% each day and then average it out over the year or whatever as opposed to, say, simply taking 1% on December 31st or the anniversary of the original investment? Maybe somebody else can clarify?

Quinn Life's 1% charge

Hi Clubman.

You're right! I have just described a bid/offer spread scenario! And Quinn Life state emphatically that they don't impose this type of charge.

Now, that takes me back to square one.

When Quinn Life say that they impose a 1% ANNUAL MANAGEMENT CHARGE and that this charge is exercised DAILY on the UNIT PRICE, then please, someone, tell me how this works EXACTLY! Let me see someone doing a little sum!

Auburn.

Management Charge

Hi Auburn,

They charge 1% per annum spread over the year. Let's assume 250 business days in the year (markets open, funds priced, etc). Therefore they charge (1/250) per day, or 0.004 of a percent.

Re: How the 1% charge by Quinn Life works?

Is that definitely it so?