07 Diversifying Your Portfolio (Chris Rose).ppt

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07 Diversifying Your Portfolio (Chris Rose).ppt

  1. 2. Diversifying Your Portfolio Chris Rose Crown Cycling Circle Investment Club
  2. 3. Agenda <ul><li>Introduction </li></ul><ul><li>Consider the true aims of an investment club </li></ul><ul><li>The need to diversify </li></ul><ul><li>The advantages of an investment club </li></ul><ul><li>Alternative investment opportunities </li></ul><ul><ul><ul><li>Exchange Traded Funds and Commodoties </li></ul></ul></ul><ul><ul><ul><li>Fine Wine </li></ul></ul></ul><ul><ul><ul><li>Gold </li></ul></ul></ul><ul><ul><ul><li>Property </li></ul></ul></ul><ul><ul><ul><li>Others </li></ul></ul></ul><ul><li>Getting started making alternative investments </li></ul><ul><li>Summary </li></ul>
  3. 4. Introduction <ul><li>It doesn’t just have to be about stocks ! </li></ul><ul><li>Always lots of reasons NOT do to something </li></ul><ul><ul><ul><ul><li>fear of the unknown </li></ul></ul></ul></ul>
  4. 6. Aims of Our Investment Club <ul><li>Make money </li></ul><ul><li>Learn </li></ul><ul><li>Have Fun ! </li></ul><ul><ul><li>……………………BUT IN WHAT ORDER ? </li></ul></ul>
  5. 7. The Need to Diversify Balance your portfolio according to your risk profile …… but keep it interesting !
  6. 8. Why Diversify Within an Investment Club <ul><li>Spread risk of club portfolio </li></ul><ul><li>Broaden the spectrum of investments to improve retention and interest </li></ul><ul><li>Produces great learning opportunities </li></ul><ul><li>Explore the unknown </li></ul><ul><ul><li>Leverage knowledge and experience of members </li></ul></ul><ul><ul><li>Curb over enthusiastic and irrational decisions </li></ul></ul><ul><li>Make Money ! </li></ul>
  7. 9. Alternative Investment Opportunities <ul><li>Exchange Traded Funds / Commodities </li></ul><ul><li>Gold </li></ul><ul><li>Property </li></ul><ul><li>Fine Wine </li></ul><ul><li>……………others </li></ul>
  8. 10. Exchange Traded Funds (ETFs) <ul><li>What is an ETF / ETC </li></ul><ul><ul><li>Reducing risk </li></ul></ul><ul><ul><li>Accessing opportunities </li></ul></ul><ul><ul><li>Low administration costs </li></ul></ul><ul><ul><li>High Liquidity </li></ul></ul>
  9. 11. Examples of ETF’s <ul><li>UK property : iShares FTSE UK Property Fund (IUKP) </li></ul><ul><li>China : iShares Xinhua China 25 (FXC) up 120% in Sept 06 – Sept 07 </li></ul><ul><li>Brazil : Up 95% in last 12 months </li></ul><ul><li>www.ishares.co.uk </li></ul><ul><li>www.etfsecurities.com </li></ul>
  10. 12. Investing in Fine Wine
  11. 13. Investing in Fine Wine <ul><li>Why wine ? </li></ul><ul><li>Depreciating asset </li></ul><ul><li>Established market </li></ul><ul><li>The model is well understood </li></ul><ul><li>Fun doing the research </li></ul><ul><li>You can drink it ! </li></ul>
  12. 14. Investing in Fine Wine <ul><li>How it works </li></ul><ul><li>Initial Finite supply </li></ul><ul><li>Growing demand </li></ul><ul><li>Later a dwindling supply </li></ul><ul><ul><li>… All leading to an increase in the value </li></ul></ul>
  13. 15. Investing in Fine Wine <ul><li>Picking a good vintage </li></ul><ul><li>Broker recommendation </li></ul><ul><li>Robert Parker Score 95% http://www.erobertparker.com/ </li></ul><ul><li>Wine Spectator Magasine </li></ul><ul><li>Online research – www.decanter.com </li></ul>
  14. 16. First Growth 1990 Vintage Source : Morgan Aston Ford 769 100 Margaux 725 96 Latour 725 96 Haut Brion 355 92 Lafite 278 87 Mouton Rothschild 10 year % increase Parker Score    
  15. 17. First Growth 1990 Vintage
  16. 18. Investing in Fine Wine <ul><li>Practical issues </li></ul><ul><li>Find a good broker </li></ul><ul><ul><li>Storage </li></ul></ul><ul><ul><li>Market reports </li></ul></ul><ul><ul><li>Low Commission </li></ul></ul><ul><ul><li>Proactive </li></ul></ul><ul><li>I use Morgan Aston Ford : http://www.mafltd.dircon.co.uk/ </li></ul>
  17. 19. Gold <ul><li>Gold is a commodity and traditional home for our money in times of trouble, easy to track and highly liquid. </li></ul>
  18. 20. Gold Chart
  19. 21. Accessing the Gold <ul><li>Krugerands under the bed of every member ! </li></ul><ul><ul><ul><li>Gold Coin – Sovereign or Krugerand </li></ul></ul></ul><ul><ul><ul><li>Gold Bullion </li></ul></ul></ul><ul><ul><ul><li>Mining eg HOCHSCHILD MINING PLC (HOC) </li></ul></ul></ul><ul><ul><ul><li>ETF – Gold Bullion Securities (GBF) </li></ul></ul></ul><ul><ul><ul><li>Superb online tutorials </li></ul></ul></ul>
  20. 22. Gold Bullion <ul><li>Bullion - </li></ul><ul><ul><ul><li>“ Good Delivery” bars </li></ul></ul></ul><ul><ul><ul><li>Physical possession </li></ul></ul></ul><ul><ul><ul><li>Part or whole bars </li></ul></ul></ul><ul><ul><ul><li>Online – eg www.bullionvault.com </li></ul></ul></ul>
  21. 23. Property <ul><li>UK property vs Overseas property </li></ul><ul><li>Location location location ! </li></ul><ul><li>Controlling the passion </li></ul><ul><li>The structure of the club and ownership </li></ul><ul><li>Poor liquidity </li></ul><ul><li>Long terms costs of ownership </li></ul><ul><li>Use ETF ? </li></ul>
  22. 24. …………..Others <ul><li>Commodities http://www.etfsecurities.com </li></ul><ul><li>Venture Capital Trusts </li></ul><ul><li>Film </li></ul><ul><li>Land </li></ul><ul><li>……………… </li></ul>
  23. 25. Be Brave !
  24. 26. Where to Start <ul><li>Consider the asset allocation of the club </li></ul><ul><li>What type of alternative investment inspires you </li></ul><ul><li>Detailed research into an investment </li></ul><ul><ul><li>Club structures </li></ul></ul><ul><ul><li>Goals </li></ul></ul><ul><ul><li>Exit strategy </li></ul></ul><ul><li>Invest and Monitor </li></ul>
  25. 27. Summary <ul><li>Stocks and shares are not the only form of investment opportunity open to investment clubs. </li></ul><ul><li>You will gain from the learning experience, you will have a lot of fun, and it may even make a profit ! </li></ul><ul><li>Health warning : All investments may go DOWN as well as up and these ideas are no exception </li></ul><ul><li>i.e. don’t blame me ! </li></ul>
  26. 28. Challenge for WMS 2008 <ul><li>Make at least one alternative investment. </li></ul>

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