With global demand, economic growth, and interest rates at historically low levels how are businesses and investors across the globe generating growth in their asset portfolios? Fund Managers across the Globe have endured three years of relentless volatility in asset prices, unprecedented levels of global political and economic uncertainty and the worst financial crisis and economic recession since the Great Depression. However, Fund Managers are still required to deliver attractive real returns to their investors. The projections on how to fix the economy, the financial sector, the end date for the trauma, and what the future holds are innumerable and frequently cloud the objective at hand – to generate higher risk adjusted returns.

Fund Managers have had an opportunity in the past few years to take advantage of dramatic price movements in a short space of time. With the large price fluctuations, fund managers were able to capture undervalued assets at steep discounts and hold them for their medium to long term portfolio. This environment has also afforded them the opportunity to realize significant profit from speculative trading in what may be traditionally considered a short period of time. With some conservatively managed USD denominated mutual funds up 17 per cent year on year, investors are enjoying the gains that many fund managers have generated despite the seemingly dismal global environment.

Pooled investment products are a great way to access higher returns on your funds. These products are essentially vehicles that pool funds from different investors and invest the money in different types of instruments. The type of instruments selected is dependent upon the investment policy (i.e. goals and objectives) of the particular product. Examples of managed investment products include mutual funds, real estate investment trusts and exchange traded funds. It is important the investors understand the trading culture and general philosophy of the fund manager to determine its risk profile. Each product usually has a different risk appetite that is determined by its underlying assets.

These products give investors access to professional investment management. The Fund Manager is responsible for the research, selection, and monitoring of the performance of the assets that the product invests in. For large institutional investors, this can relieve some of the administrative burden from their internal investment management arms, and also provide some diversification. Similarly, for individual investors, they also benefit from the reduction in the administrative hassle and the constant monitoring and pressure that comes with tracking your investments.

However, some investors cite this lack of control as a drawback. Investors typically cannot ascertain the exact make-up of a fund’s portfolio at any given time (outside of reporting periods) nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. Investors are fairly far removed from the execution of the trading strategy unless they hold a seat on the Investment Management Committee.

Having access to new investment opportunities is another major advantage of these products. Frequently, investors can use these products to tap opportunities and benefits that may be outside of their respective jurisdiction, field of expertise or income bracket. A pooled investment product can give you access to opportunities you could not ordinarily have taken advantage of due to the prohibitively large size of the investment or specialized expertise needed to execute.

Investors looking to preserve and grow their savings with sound medium to long term investments should look to pooled investments as a means of protecting and expanding their capital.

Marian Ross is a business development officer at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm