The Right Partner In Your Investment Journey
Investors can sometimes overlook their risk appetite in the pursuit for returns. This can potentially lead them to make the wrong judgement in who they put their trust in and ultimately fall victim to poor investment decisions.
Some older investors may well recall, the Global Financial Crisis saw thousands of local investors lose their entire retirement savings to Lehman-linked products. In the investigation report released by the Monetary Authority of Singapore (“MAS”), findings revealed that there were extensive mis-selling of Lehman products, even to the vulnerable investors.
It became Déjà vu all over again with the Hyflux saga in 2018, this time implicating 34,000 mom-and-pop investors who bought into perpetual notes and perpetual shares (“Perps”) issued by the embattled water treatment company. In one of the most high-profile debt restructuring cases seen in the city state, the amount owed to retail investors totaled over $900 million, dwarfing the $500 million in dues from the Lehman collapse. Yet to this day, no resolution has been reached after multiple deals fell through one after another, and investors are still left hanging.
On top of all these, retail investors are also vulnerable to illegitimate investment ruses that we so often hear about. In fact, according to the Singapore Police Force, victims were cheated of at least $1.6 million investing in fake loan schemes in January to March 2020. The largest amount cheated in a single case was $92,000.
Spotting Red Flags
The thing with any investment is that it comes with risk. The rewards of greater returns are simply the compensation to investors for taking on greater amount of risks. This “risk-return trade off” is an investment principle since time immemorial.
As with all unsound investment schemes though, the most obvious red flag that should set your radar off is always the promise of high returns to low or no risk. As the old adage goes, “if it is too good to be true, it probably is.”
Another common tactic used by illicit operators is the offer of exceptionally attractive commissions, bonuses or discounts for referring friends and families. Illegitimate schemes often put up money incentives to dupe their victims as a quick way to enlarge their investor base.
In order to steer clear of shady investments or unlicensed brokers, investors should research to verify legitimacy of any investment scheme before investing in it. There are some publicly available records kept by the MAS that can be useful for such purposes. For instance, the Financial Institutions Directory keeps a list of regulated financial institutions, while the Investor Alert List keeps records of unregulated persons or entities who may have been wrongly perceived as being licensed or regulated by the MAS.
The MAS also keeps a Register of Representatives (“the Register”), a public record of individuals who conduct regulated activities. Investors are strongly advised to check the Register to verify a representative’s credentials to avoid dealing with an unauthorized person.
Finding The Right Partner Goes A Long Way
As illustrated by the above examples, many retail investors that had lost money investing in Lehman-linked products or Hyflux Perps did not fully comprehend what they were investing into. In both cases, many had claimed that they had been misled to perceive such products as straight bonds when they were in fact much more complex.
Since not everyone is well-equipped to navigate the wide swath of technical investment options themselves, it may well be beneficial for this group of investors to entrust investment decisions to a competent and trustworthy fund management company (“FMCs”) that can better help them secure their financial well-being.
At Phillip Capital Management (“PCM”), prudence and rigorous due diligence serve as the bedrock for all of our investment decisions. As stewards for our clients’ monies, we undertake the role of helping them discern good investments from bad ones. For our various actively managed funds, we further bring value to clients by navigating uncertainties, and identifying opportunities when the market is inefficient and where assets do not reflect their intrinsic value.
For investors that prefer the passive approach to investing, PCM has also brought to market, some innovative exchange traded funds (“ETFs”) with investment strategies that were once not typically offered by other FMCs.
Regardless whether one wants to build an income portfolio or growth portfolio, clients can gain access to professional investment solutions through the various product structures or investment vehicles in PCM’s ecosystem.
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