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Money matters: Big is Best? Part 2
Graham Macdonald
MBMG International Ltd.
The currency and taxation arrangements of many expatriates
are extremely detailed. To our mind, private banking hasn’t grown to reflect
that - it still remains the case that banks will just propose investing client
funds into equity markets when deposits become sizable, just as they would have
100 years ago.
UBS launching their range of Absolute Portfolios and funds is a big step
forwards, but it’s more of a step into the 20th century than the 21st. The banks
would argue that in local branches no-one else can provide this service to small
account holders today - that may well be true - for sure the internet has not
yet even begun to offer advantages that can compare to local personal service.
The bank also argues that their biggest clients don’t need a holistic service -
investors with US$100 million or upwards may well employ their own tax lawyers
and other specialist advisors and, therefore, simply come looking purely for
fund management services in isolation.
However, the vast majority of our clients, with investable assets between
US$50,000 and US$5,000,000 require a personal, tailored, efficient, holistic
solution. We believe that the onus is on us to select the best banks, the best
portfolio managers, the best custodians, the best trading platforms. These are
all very different skills and therefore require different providers. You may
choose a TV, video and DVD player from the same manufacturer but private banking
equates to also buying your car, fridge, laptop and washing machine from the
same company too!
Specialization generally allows focus on core skills - we believe that private
banking was once an extremely useful local service but in this day and age has
become outdated and much better alternatives are available.
We’re not sure whether the idea of a single provider purporting to offer a wide
range of specialist skills amounts to corporate arrogance (clients must deal
with us because we are XYZ Banken Geschaft) or corporate complacency (we don’t
do a very good job, but it is good enough for most people to continue to come to
us rather than find better alternatives), but either way it distresses us that
so many people are so willing to settle for so much mediocrity.
In the 21st century better alternatives are available and as more and more
clients take advantage of these, private banking will, hopefully, be forced to
sharpen up its act. UBS launching the range of Absolute Return portfolios and
funds is one of the first signs that this is happening. We’d recommend as
essential reading Michael Lewis’s excellent “Liar’s Poker” as evidence of how
private banks’ self interest invariably prevails in the conflict of interests
between the banks’ own trading desks and their private banking clients.
UBS strengths
That’s not to say that there aren’t positives to the UBS offering -
the marketing here is excellent and the materials extremely well put together.
UBS is a huge multinational conglomerate that leverages their brand extremely
well. However, we are extremely concerned about some of the UBS Absolute Return
Portfolio’s weaknesses.
UBS Absolute Return weaknesses
- Lack of impartiality and suitable experience/skillset at portfolio
construction - UBS Global Asset Management effectively operates as 5 investment
divisions :
Equities
Bonds
Property
Deposits
Alternatives
Once you make it to the top of one of those divisions you get placed in charge
of asset allocation. This means that your preparation for deciding how much
allocation is suitable to stocks, how much to bonds, how much to alternatives,
how much to property and how much to deposits could be made by someone whose
experience and qualifications are based upon knowing whether Microsoft is a
better buy than IBM or not - a very different skillset from intimate knowledge
of something like commodities. Also, if you’ve spent 30 years working in equity
departments you’re invariably going to be biased towards equities as your
understanding and familiarity is higher. This leads to sub-optimal portfolio
construction.
- There is also a lack of pre-eminence across asset classes. We don’t believe
that any one organisation has the skills across every asset class, let alone
every sub-class. This creates 2 problems:
a) Their investment to certain sectors doesn’t yield results that are as good as
they could be;
b) They don’t have exposure to sectors where they lack skills - they might miss
out on the most attractive sectors because they know that their skills in this
area are weak.
Independent, impartial and personal
Whereas MBMG’s portfolio managers regard every type of market as
offering an opportunity and we’d want to have access to whoever has the best
skill set in that market place, UBS is well placed in that they do have
excellent skills in alternatives, strong skills in equities, reasonable skills
in bonds and deposits. However, their performance indicates below par skills in
property. More importantly they only cover a fraction of the markets that exist
and therefore constantly run the risk of missing opportunities and when they do
capture the opportunities, there is always the risk that someone else is doing
it rather better. There might be 10 sector property funds of which 9 are doing a
better job than UBS but they can only use their own fund.
Performance
MBMG has, in essence, 5 core portfolios and UBS 3 - in their material
they only mention 2 portfolios that relate to the 2 best performing of the 3
funds - it would appear that the worst performer has been swept under the carpet
and forgotten about. If that’s the case, this strikes us as somewhat misleading.
This is a new discipline for UBS, as they started offering these portfolios as
private client portfolios in 2004 and made them publicly available in June last
year. We’ve monitored the public portfolios closely as UBS’s marketing machine
has ‘encouraged’ use of them.
However, thus far, we have chosen not to take exposure because our concerns are:
a) They’re too new to be fully tested - i.e. it’s maybe too early to form an
opinion;
b) They’re new within UBS, the asset allocation process there isn’t sufficiently
mature - i.e. we’re not sure that they know what they’re really doing yet;
c) The weaknesses referred to above;
d) The relative performance hasn’t been compelling.
It’s very difficult to talk about overall portfolio performance here - we do
have standard portfolios which we use as a benchmark BUT virtually every client
portfolio that we put together tends to be unique - just our ‘standard’
portfolios performance in every currency would, however, run to War & Peace.
However, by using our core investment advisors, Miton Optimal, and just using GB
Sterling, we can state that over the last three years an average portfolio has
always been in the top decile and is usually first, which is why Miton Optimal
has been recognised as the top fund performance manager by S&P, Lipper and
Multi-Manager.
Continued next week…
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The above data and research was compiled from sources believed to be
reliable. However, neither MBMG International Ltd nor its officers can accept
any liability for any errors or omissions in the above article nor bear any
responsibility for any losses achieved as a result of any actions taken or not
taken as a consequence of reading the above article. For more information please
contact Graham Macdonald on [email protected]
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Snap Shots: Have camera - will travel and shoot for food
by Harry Flashman
 Want
to travel all over the world, taking photographs of gorgeous women on
tropical beaches? Many amateur photographers wonder just what it is like
to be a professional and be paid for doing what amateurs do for no pay
at all. What a wonderfully idyllic existence. Unfortunately, I must
burst your bubble I’m afraid. Pro shooting is a sure-fire way to get
stomach ulcers.
Let’s take the Overseas Trip to start with. I’ve been there, done that,
and my first was to the Solomon Islands to principally shoot some
beachwear fashions. Air tickets paid for photographer and model,
accommodation free and arranged in resorts all over the island groups –
this was going to be one giant paid holiday. Well, it was – on paper!
Before going on an overseas shoot you have to very carefully choose your
equipment. And take enough to cover all emergencies. For that trip I
took two Hasselblad medium formats and a 35 mm camera. A whole bunch of
lenses and a Polaroid back, some filters and many, many rolls of pro
film, all kept under refrigeration and then stored in a special “cool”
bag. A large flash and there was also a large Italian tripod. Nothing
was left to chance. Nothing could go wrong – go wrong – go wrong …!
Of course you have to record all the serial numbers of every piece of
equipment you are going to take, and make several copies. One to give to
Customs as you leave, one to give to Customs when you arrive at the
tropical paradise and another when you return to your own country.
Forget to do this little paperwork can see you paying import duty on
your own equipment on which you have already paid taxes, because you are
carrying much more than the ordinary person would be carrying. You are
now into the “commercial quantities” bracket – especially with film
stock.
The first problem we had was the special screw that fits in the tripod
head and screws into the base of the camera just vanished. No-one keeps
a spare of those – and certainly no-one had a genuine large Italian one
in a one pelican coastal town in the outer Solomon Islands. Fortunately,
the model could speak Pidgin English and between us we managed to get a
screw of the right size and pitch and made a replacement.
Hasselblads are the best cameras in the world in my opinion and they
never break down – break down – break down …! Oh yes they do! Both of
them suffered a malfunction and by three quarters of the way through the
idyllic week I was rapidly going bald! Fortunately we had brought the 35
mm camera along – but the refrigerated pro film was medium format – not
35 mm. Fortunately again we managed to find the only pro photographer
resident in the Solomon Islands, an underwater guy, but he had 35 mm pro
film. I happily paid whatever he wanted!
Of course, when you are shooting fashion overseas you take the garments
with you and they just tumble out of the suitcase freshly pressed and
immaculate. No, you have to take an electric iron with you, but some of
the locations were so far from civilization that there was no
electricity. Ever wondered why you see so many tropical beach shots
where the model has obviously waded out to sea in her good gear and is
standing there in wet clothes? It’s because they couldn’t iron the
creases out!
By the end of one week, you are totally exhausted. You have got up early
for seven days to get that magic morning light. You have spent the major
part of the day trudging through tropical paradise undergrowth, loaded
down with photo gear to the next location, in time to set up for the
magic late afternoon light. You then spend the evening getting
everything ready for the next day – including ironing fashion clothes,
some of which the model will drop in the mud the next day.
Who’d want to be a Pro? Mind you, all that drudgery didn’t stop me when
I was asked to go to Fiji and shoot a travelogue the next year! Who
wouldn’t want to be paid to take photographs in a tropical paradise?
Modern Medicine: Are shopping centers deafening your children?
by Dr. Iain Corness, Consultant
Deafness is an increasing problem in Thailand, a fact which
is being acknowledged by the various noise abatement bodies in this country
(and yes, amazingly there are some).
For some reason, noise seems to have become part of the local ‘culture’. How
many times have you heard people screaming into their telephones? At volumes
so loud they really don’t need the phone at all. Go into shopping centers
and be physically assaulted by noise levels so great they approach the
threshold of pain. I personally experienced one promotion for children that
had passers-by holding their hands over their ears, whilst two screaming and
amplified emcees exhorted the children to crowd around the stage (and its
boom boxes). The damage to the hearing of young ears could be horrendous!
Even walking down the street your ears are assaulted by not just motorcycles
but slow moving promotional vehicles with mobile boom boxes to tell you all
about the newest shopping center, where you can shop in comfort, other than
unrestricted noise!
What does not seem to be understood by the public at large, however, is that
hearing, like eyesight, deteriorates over time. However, damage the hearing
early in life and when the hearing loss through aging is added to the
hearing loss from noise exposure, you are guaranteed of increasing deafness
as you get older.
Having been involved in industrial hearing protection in Australia for many
years, we had to convince a reluctant workforce that it was necessary to
wear hearing protection, if the industrial noise level exceeded 90 decibels
(dB) for a 40 hour week. In auditory terms this is known as a ‘noise dose’
of 1.0. If the noise level experienced by the unprotected ear was over 120
dB, then the ‘safe’ exposure was measured in minutes. And as an example of
120 dB, that is the level reached by an ambulance siren – or a rock concert.
Other examples are the hammer drill that you use to drill holes in concrete
which operates at 114 dB or a headset for personal listening at full volume,
so the ‘safe’ level here is 15 minutes a day. Even a hand drill operates at
98 dB, so the unprotected ear should not be exposed to this level for more
than two hours.
The noise induced deafness characteristically affects the hearing at 4 kHz
first, and that is towards the upper musical ranges, and it goes on from
there. If this noise induced hearing loss begins early in life, then the
chances of the person ending up clinically deaf by the time he or she is 50
years old is very high.
So what can be done? Various research papers from around the world have
managed to quantify the risk, and others have managed to show that the risk
is perceived by older children and young adults, but they are not likely to
do much about it. In some ways I can agree with them. Why bother going to a
rock concert if you have to sit quietly to hear the music?
The Canadian Journal of Public Health looked at this problem last year and
reported that 74 percent of rock concert attendees thought it was likely or
very likely that noise levels at music concerts could damage their hearing,
but only three percent wore hearing protection.
Dr. Jeannie H. Chung and co-workers from the Harvard Medical School found
that only eight percent of young adults thought hearing loss was a very big
problem and yet most respondents had experienced tinnitus or hearing
impairment after attending concerts (61 percent) and clubs (43 percent).
So we know the problem exists. We know the relative ‘safe’ levels of noise
exposure, but is wearing ear protection the answer? Quite frankly, this is a
classic example of the ambulance at the bottom of the cliff, rather than the
fence at the top of the cliff. Preventive action needs to be done at the
noise source. It is time for us to start shouting at the regulatory
authorities! And keep your children away from noisy shopping center
promotions!
 Heart to Heart with Hillary
Dear Hillary,
After the recent month long ecstasy of the World Cup, I am left with a
dilemma. My lady, who before never had the slightest interest in football,
has developed an unbelievable passion for the game. I believe it started
when Germany played their first game, and she took a fancy to Bollock (I do
hope I’ve spelt his name right), the German captain. Even now the World Cup
is over, I am being woken from my alcohol induced slumbers at two and three
o’clock in the morning, to my darling watching the football channel and
asking me if I’m sure the World Cup is over. Even her previous hobby of
sleeping appears to have taken a back seat to football. Hillary, do you have
any ideas how I could dampen her enthusiasm for the beautiful game, as I
fear that come the new football season, watching the premiership football at
my local watering hole with the lads on Saturday and Sunday nights will
never be the same again.
Wayne Looney
Dear Wayne,
Your letter is interesting, for it shows the lengths some people will go to
hide the true reasons for their queries. It is not the fact that you get
wakened from your alcohol induced slumber that is the problem, it is the
nagging worry that your football mad darling will want to come with you to
your weekend watering hole and spoil your “fun”. This is where you and your
mates use the football matches as the excuse to neglect wives and family and
perhaps indulge in a bit of dribbling and ball play with the bar girls. With
your darling now so engrossed in the game it will be difficult for you to
get her to play Left-Right-Out at weekends, so you really do have a problem,
my Petal. Perhaps the answer is for you to install a satellite TV that shows
the Bundeslega, so she can follow Bollocks and other ball kickers, even if
she can’t follow the commentary, but make sure the watering holes doesn’t
show the German league, or you will have blown it.
Dear Hillary,
My girlfriend wants me to get her a credit card. Do you think this is a good
idea? I am worried that she will go mad with it in the first month and I
will be left with a huge bill to pay. Do Thai women work this way? I really
do need help here. I have an ordinary credit card myself, nothing special,
and I just use it for when I need some quick cash out of the ATM.
Credit Card Charlie
Dear Credit Card Charlie,
The rich get richer and the poor get poorer. I think those were the words of
an old song, but a quick glance at the financial pages of any newspaper will
show they are still pertinent today, my Petal. What brought this to mind was
an article I read the other day on platinum credit cards. You know, the
expensive ones, not your ‘ordinary’ card.
Now I have never been in the situation where I would be eligible for one of
these platinum beauties. You have to show that you have a very high income
before you can upgrade from the ordinary cheap plastic variety, up to a
silver and then a gold card. To aspire to a platinum card requires an income
that has so many zeros after the first number that I run out of fingers
counting. No, the banks don’t need to keep one aside for me, or you, it
sounds.
However, if I were able to get one of these cards, the banks would then
shower me with additional goodies. Extra discounts will be made available to
me, special low prices on goods, and the bank will, for no charge, give me
extra services and travel planning, booking, insurance and assistance. I
will even get the internet cheaper! Will somebody please tell me why?
If I have this super abundant financial status, I can afford to pay full
price quite easily. I can pay for travel bookings and assistance. Just the
same as I currently have to, because I haven’t got an astronomical income.
Surely this is absurd! If I am rich, I can get the same goods and services
cheaper than I can if I am poor! The poor pay top price, but the rich get a
discount. The banks are certainly making sure that the rich get richer,
while the poor get poorer.
It certainly is a topsy-turvy world that we live in. The poor pay more taxes
than the rich. In fact, the super-rich don’t pay taxes at all (though, to be
fair, they do have to pay the sharp accountants who ensure their tax-free
status). The poor are lucky to get any credit cards at all, while the rich
are showered with them. Please do not get me wrong, I am not jealous. Money
isn’t really all that important. It is merely the lack of it that is the
problem! However, perhaps one day the bank will make a mistake and send me a
platinum card, and then watch me become the discount king! But for your
problem, Charlie, I would suggest that you tell your girlfriend she should
apply by herself for a card. Don’t get involved. Unless you like being a big
spender!
Beyond the Beach: “The British Abroad”
An interview with Peter Upton, Director of the British Council in Thailand
Caspian Pike
And so to Bangkok. For the tenth programme in the series, Andrew Watson
visits the Head Office of the British Council in Thailand, in Siam Square.
Having travelled far and wide over the past two months, with the question of
cultural identity seemingly never far away, “Beyond the Beach” discovers an
organisation which projects a hugely positive side to “The British Abroad”.
So much for perfidious Albion!
Peter Upton talks about the role of the British Council, both here in Thailand and
Worldwide.
Established by Royal Charter as an independent organisation in the UK sixty
years ago, the British Council is a massive presence worldwide, with a
network of 218 offices. There’s been a British Council presence in Thailand
since 1938. Founded on the belief that “the culture, creativity, languages
and way of life of a nation can be shared abroad as a means of strengthening
mutual understanding and collaboration,” they are throbbing hubs of creative
and educational activity. Their espoused intention is to enhance the
reputation of the UK in the world as a valued partner. Lofty ideals, you
might think? Altruistic aspirations? Well, what about putting them into
practice?
It is left to Peter Upton, Director of the British Council in Thailand, to
explain how their mission statement is consistently and impressively
implemented across a range of initiatives.
Peter Upton maintains a ridiculously busy schedule; the British Council, we
learn, is a huge operation. He’s an egalitarian, enlightened leader. The
office is open-plan; there are no doors to hide behind. He believes in
encouraging his team to express themselves with creative élan. It’s an
obviously happy place, with a pervading sense of purpose.
Moving around the aesthetically alluring interior of the building, Watson
makes the point that a lot of British people don’t seem to know about the
extraordinary work that the British Council does. Part of the reason for
this, Peter Upton explains, is that the various projects are primarily aimed
at indigenous populations. Also, the majority of employees are from the host
country; another deliberate policy. It’s definitely not some kind of ‘expat’
club.
Typically tongue in cheek, Watson and his guest take tea together, indulging
in that quintessentially British pastime, whilst Peter Upton gives some
examples of how his organisation translates rhetoric into action. How do
they achieve objectives such as, “projecting creativity and creating
opportunities to connect with the latest skills, ideas and experience?” The
answers are illuminating and through Peter Upton’s evident passion, often
inspiring.
The programme changes direction a little as BYB explores the man behind the
job. Peter Upton is refreshingly apolitical and speaks with humility and
enthusiasm about a journey which has taken him across the world; an odyssey
which has consistently embraced ‘Internationalism’ by uniting culture and
education. Back in the office, he talks about the future of the British
Council, which seems to be as bright as the outrageously orange furniture on
which he is seated. I was left feeling that this guy is in the right job.
It’s an engaging show, a logical progression from last week’s piece with
Chris Wright, the “Twenty first century Guru”. I’m thinking to myself, “What
have the BYB team got in store for us next?” I’m looking forward to finding
out.
Catch Andrew Watson’s interview with Peter Upton, Director of the British
Council in Thailand, “The British Abroad” on Sunday, at the following times:
Sophon at 8:00am - Midday - 4:00pm - 8:00pm and Midnight.
Chonburi at 9:40am - 2:00pm - 8:40pm and 40 minutes after midnight.
Jomtien at 9:00am - 12:30pm - and 9:00pm
Sattahip at 8:00am - 1:30pm - 5:00pm - 8:00pm and 11:00pm
A Female Perspective: A difficult time
with Sharona Watson
Sharona and her sisters; together again.
In the fallout of feeling forty, now that the euphoria of celebration has
settled back into routine, I can focus on things which really matter. Even
though I have no worries about dealing with anything which fate throws at
me, whatever I have to do takes time, planning and energy. I feel like I’ve
woken up the morning after a great party (which I’ve done literally a few
times in the past few weeks) and found debris everywhere. Bottles, plastic
plates stained with the remains of a variety of foods, cigarette butts
rocking around the bottom of half drunk beer cans, the stale stink of drink.
In such circumstances, the first thing I do is open all available windows
and doors and let the sea breeze sweep the fustiness away. I find a great
‘morning’ CD, ‘The Lighthouse Family’ or Bill Withers and throw it on. Out
come a series of black bin bags and off I go. When I start, I can’t stop
until it’s finished. And when it’s finished, I’ll sit with a book and a cup
of Arabic coffee and read in solitude, whilst the waves wash peace into my
soul. I think of the conversations I’ve had and the people I’ve met during
the course of the party and then slowly, my mind fills with the things I
have to do.
The school summer holidays for children seem so long; at least six weeks,
often two months. I can’t understand why they last so long. Living so far
away from family and friends, long spaces like this present many
difficulties. We would love to visit everyone but those we would wish to see
live across the globe, from Canada to South Africa, to Australia. You have
to pick and choose. Those we don’t see this year will be at least a year
older next time we see them. Children will be unrecognisable, the passage
from childhood to adulthood an immediate transformation, testament to the
lost years. Photographs, home movies, even telephone calls, MSN, Skype, are
not enough. There’s nothing quite like holding the ones you love in your
arms. For all the pleasures of living in Thailand, I do miss some special
people, very much.
So this summer, at massive expense, we are visiting my family for the first
time in five years. When I saw my favourite sister (of three) at the
airport, my heart overflowed and the tears spilled down my face. She hardly
recognised my children. Last time she had seen them they were nine and one;
now they are fourteen and six.
It’s incredible to see the changes that have happened in the country even in
the relatively short time that we’ve been away. The airport is no longer a
scrum; people used to barge you out of the way. I was happily surprised to
find the airport experience almost enjoyable. On the other hand, as we drove
through a suburb of our home town, it’s reassuring to see that some things
always seem to remain the same. The routine pace of life hasn’t changed. The
culture is so embedded that it will take generations before it is possible
to detect a difference. There’s an old Yemenite quarter where all my elderly
extended family and relations still live. Some of them haven’t seen me for
twenty years. So it’s almost unbelievable that when I took a stroll around
the area, they recognised me immediately. Great aunts, great uncles, long
lost cousins; suddenly they had congregated together to welcome me back
home. I felt like an explorer returning from a great journey. Maybe even
like a ‘prodigal’ daughter. It reminded me of my roots and the very strong
sense of community which surrounded me as I grew up. Yet, the landscape
around the low-rise ramshackle Yemenite area has altered beyond recognition.
Where I remember fields, orchards and grape vines, there are now high rise
apartment blocks, shopping centres and roads.
When all my close family came together, it was remarkable how quickly we
slipped back into the same dynamic we had as children. I’m the second of
four sisters and we all have completely different personalities. The eldest
has always adopted a bossy, maternal role; I’m the naughty one, the third is
driven and the fourth (whom I get on with best) is quiet, sensitive and
thoughtful. Our lives have taken on very different directions and if there’s
one thing we have in common, it’s our strong sense of independence. Or, as
Andy calls it, ‘stubbornness’. We have had to be strong in our lives, for
reasons that I won’t go into just now, except to say that our shared
experience has generated a sense of mutual respect for what each of us has
achieved. It hasn’t been easy and there’s nothing like coming home to remind
you of this.
There’s something else as well. Every time we come back here, there’s
terrible violence. I don’t want to dwell on it in this column, for two
reasons. Firstly, my husband is writing about it elsewhere. Secondly, I
think the best way to deal with the kind of extremism that is all around us
is to get on with your normal lives as best as you can. It’s a difficult
time. Like I wrote last week, it’s important to maintain a positive mental
attitude (PMA). If spending time in a war zone can do anything good for you,
then it helps focus the mind and heart on what’s important. So no matter
where I might be, war or no war, I am happy to be with my family whom I
hardly ever get to see. I know what I believe; I believe in the sanctity of
human life and I will do whatever I can to stop the suffering of people
wherever they are and whoever they are. Recently, I couldn’t understand why
I was chastised for stopping to help someone in Pattaya, who had fallen off
their motorbike. Even when I was being falsely accused of being responsible
for the accident, it didn’t alter my determination that I would do the same
again.
Next week: Back to Life
[email protected]
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