Funds Focus

Why do we sit on failing investments?
Two years ago (Psychology of Investment), I discussed the psychology of our investment decisions and why we have a psychological predisposition to buy when the markets are high and sell when markets are low.
At the time, I felt that my article had addressed the basics of structuring an investment portfolio to avoid the common pitfalls whilst highlighting the emotional attachment that we develop with our own investments and our propensity to avoid loss.

In our March 2010 issue we discussed the increasing prevalence of volatility overlays in structured products. Investor participation in the growth/loss of the underlying investment decreases as volatility goes up and increases as volatility goes down. This results in a lower product costs as the issuer does not have to bear the cost of hedging when volatility is high, and therefore costly.
Comparing volatility overlays
It should come as no surprise that not all volatility overlays are equal

Our June 2009 newsletter featured capital protected products and highlighted some of the pitfalls investors have recently encountered with Threshold Managed/CPPI structures such as Perpetual Protected Investment Series and Macquarie’s Fusion Fund range. Based on the level of enquiry we have had, I feel compelled to revisit Threshold Managed/CPPI capital protection as many of these products are now cash locked (or as good as) with no prospect of achieving a positive return. For many, switching