http://www.asianinvestor.net/News/368907,sumitomo-life-division-sees-sell-opportunity.aspx

Preparing your portfolio for the new year – Debt – Deals – News – FinanceAsia.com – The network for financial decision makers.

Japanese hedge funds top global peers with 25% gain  http://www.asianinvestor.net/News/368716,japanese-hedge-funds-top-global-peers-with-25-gain.aspx via @AsianInvestor

Japan seen as the market to watch in 2014 http://www.asianinvestor.net/News/368666,japan-seen-as-the-market-to-watch-in-2014.aspx via @AsianInvestor

Thematic investing: the neverending story

By Yuri Bender

03 May, 2012

The popularity of hedge funds and high yield investments will rise and fall, but the thematic approach appears to be a trend with staying power

When Wall Street legend Michael Milken was indicted on 98 counts of securities and rackeering fraud by US prosecutors in 1989, few would have thought the ‘junk bonds’ he first pioneered and later discredited would make such a powerful comeback into the portfolios of US and European investors.

More than 20 years later, not only is ‘high yield’ – the updated politically correct name of the asset class – seen as a high-octane, equity substitute by many private banks, but it has been the subject of record inflows intoexchange traded funds (ETFs), even though there has been doubt about how suited some of these bonds are to passive investing.

Now hedge funds, publicity victims of another scandal, are also looking for redemption and re-invention. And some say they have further to go to rebuild their reputations. After all, Bernie Madoff is serving life in prison for masterminding an unprecedented investment fraud, while ‘junk-bond king’ Mr Milken was only sentenced to 10 years for his crimes.

New York’s finance houses in particular are increasingly talking about hedge funds in a different way. At banks such as BNY Mellon, they are now called ‘diversifiers’ in client discussions.

Currently, the leading wealth manager is calling for 25 to 30 per cent allocations to such alternatives, while its very cautious client-base is clinging to the safety of cash. Yet these same investors are demanding yield and returns in one of history’s lowest interest-rate environments.

This is why BNY Mellon and competitors such as JP Morgan are calling for diversification, not just into hedge funds but also long-term private equity commitments, distressed debt and commodities, with energy a particular theme.

Indeed, the world of thematic investing is receiving a huge boost in recent times, with many Swiss, US and global wealth managers essentially adopting the story-telling approach to portfolio management. Not only is it easier to sell to sceptical private clients, wary of complex financial analysis of balance sheets and share price behaviour, but is becoming a more convenient approach for many banks to managing equities.

Even the likes of Coutts, private bankers to British royalty, are admitting that analysing individual stocks and shares is becoming too much of a lottery in today’s volatile environment. Instead the bank’s equity strategists are identifying themes which they say affect various sectors of the equity market, and then tilt wealthy client portfolios towards these sectors.

These can include export-led companies, making up to half of earnings from foreign markets, particularly Asia, high dividend-paying companies and those which will profit from lower energy prices in certain areas, notably excess gas from shale oil extraction in the US.

Themes do have their detractors, however, with critics particularly scathing about some Swiss banks who specialise in tempting investors into stocks which will apparently benefit from the expanding Asian middle class, ageing populations and replacement of traditional fuels with renewable energy sources.

But themes also have their place. Ten years ago, Goldman Sachs’ Jim O’Neill came up with the Brics acronym, describing how fast-growing countries such as Brazil, Russia, India and China would dominate portfolio investing for years to come. This is a theme few banks have ignored and many are now competing furiously to identify the next members of this exclusive club.

During the last 10 years, PWM has covered the rising and falling popularity of hedge funds through our first hundred issues. We have seen the regular re-invention of opaque products, against an often dramatic economic backdrop. But thematic investing has had a constant resonance and appears to be here to stay.

 

See Great Debate, Focus on Thematic Investing, and Alternative Agenda

FRM launches Japan fund of hedge funds

Alternatives

By Jame DiBiasio | 17 May 2012 (4 days ago)
Keywords: frm | hedge fund | fund of funds | japan | mitsui sumitomo

FRM’s Japan office is on track to raise $100 million for a Japan-focused strategy of hedge funds.

Today’s News Stories

Credit Suisse leads deepening retrenchment across UK private clients business by John Evans, International Editor 21/05/2012

What next for JO Hambro Investment Management? by Ian Orton 21/05/2012

London-based investment firm launches ‘innovative charity project’ by Polina Khoroshilova21/05/2012

The beginning of the end for the euro? – a guide for investment managers by David Renn, head of data management practice, Citisoft

High net worth mortgage specialist makes double appointment

Tech firm launches new system for UK and Irish private wealth management industry

International tax avoidance crackdown requires closer co-operation in offshore world, Jersey Finance conference told by 

Jersey-headquartered investment firm appoints consultant

Speechly Bircham advises clients on changes to SDLT

Man Group to acquire global hedge fund research and investment specialist

New family businesses want pros on the job: Barclays Wealth

Small-town millionaires grab attention of big brands ‘Boutique’ investment banks eye Asia  HSBC plans to hire tens of thousands every year New CEO for HSBC  Bank Of America Merrill Lays Off Australian Bankers Grosvenor Fund Management appoints managing director  OCBC’s CEO to step down after a decade UK, HK partners to develop offshore yuan market Singapore ‘may become largest offshore financial centre by 2015’ SGX Q2 reports lowest profit in nearly two years European hedge funds line up bets on China downturn JV Islamic asset manager establishes three Islamic funds to attract global investors  Bank says global sukuk issuance to grow to US$44bil this year A.M. Best Releases Updated Criteria Report on Rating Takaful Insurance Companies China to ease controls on HK listings – regulator Bankers face axe as jobs go overseas  SCB opens new Islamic Banking branch in Karachi Year of fear for financial services job seekers  Morgan Stanley MF launches Multi Asset Fund China speeds up QFII amid slowing economy

A “trust” is nothing more than a “contract.”

As in any contract, someone must initiate the contract (Grantor or Trustee).

The contract (trust) must specify the who, what, where, when, why, and other conditions.

Finally, the contract is for the benefit someone or something (beneficiaries: wife, children, grandchildren, church, other charitable organizations, etc.).

There are three elements to the “trust” document: Grantor, Trustee, Beneficiaries

The “Grantor”

He’s the guy with the buck$.

The grantor’s motivation is to get asset(s) out of his name for either some or all of the following:

* Asset protection / wealth preservation

* Reduce potential frivolous lawsuits

* Elimination of the “probate jail process” (see definition, below)

* Elimination of estate taxes

* To gain some tax benefit or some other tax deferral benefit.

If the “Grantor” initiates the trust (contract), it’s called a “Grantor Trust,” otherwise it’s called a “Non-Grantor Trust.” To me, it’s just legal garbage so lawyers can charge more.

If the “Grantor” wants to retain certain control over his asset(s), it’s called a “Revocable Trust” otherwise, it’s an “Irrevocable Trust.”

Revocable / Irrevocable has significant asset protection and tax differences.

“Revocable,” is like the kid next door that brings the ball to play basketball with the other kids. Everything is fine, as long as he makes the rules, and he makes the rules as he goes along. If you don’t agree, he takes the ball and goes home. Ball game over.

One name given to a revocable trust is the “Living Trust.” The sole purpose of the revocable living trust is to “eliminate the probate jail process.” Control is like the kid with the basket ball. It’s still his ball. Therefore, there’s absolutely no tax benefit and no asset protection / wealth preservation benefits.

The grantor of a revocable trust can be sued for all assets held by the revocable trust, and must pay all the taxes. Personally, I think the “Living Trust” is a sham perpetrated on you by shameless professionals.

“Probate jail process” is the process where the state takes control over your assets (estate) upon your death because “you” the owner of the assets, now dead, did not specify who should have received your assets subsequent to “your” death.

Naturally, this is a money making risk-free bonanza for lawyers, accountants, appraisers, judges, federal and state tax agencies who will consume up to 70 to 80 % of your estate. “Probate Jail.”

The federal government stakes their first and largest claim between 37 to 55% of your assets. States are second in line, then the courts, lawyers, appraisers, accountants. Finally, what’s left go to your heirs.

Currently only a few Americans prepare for this “estate death tax trap.” The federal government (your largest heir) takes the biggest chunk up to 55%. Only Japan has a higher rate of 70%. Germany takes a maximum of 40%, while Australia and Canada, take nothing.

The “Trustee”The trustee is the guy who manages your trust assets. The trustee is bound by the trust document (contract) and he has a duty to protect trust assets for the beneficiaries. Great care should be taken in your selection of your trustee. The trustee can be your lawyer (worst person you would ever trust), your accountant, best friend, or any-one you trust who’s not a relative by blood or marriage. You may have more than one trustee. I usually recommend two trustees in all cases of $500,000 or more. The trustee of an “Irrevocable Trust” has sole discretion over trust assets. Your selection of your trustee must be a carefully planned decision. The significant item to remember is that an “Irrevocable Trust” gets the assets completely out of your (Grantor’s) name and in return you get complete asset protection, elimination of probate, elimination of estate or inheritance taxes, in certain cases a tax deduction for the assets contributed to the trust, and finally, under certain conditions other uncommon tax benefits not otherwise available. Examples of irrevocable trusts are: the Ultra Trust® the Medallion Trust® theVertex Trust® the Charitable Remainder Trust, the Charitable Lead Trust. Additional: In cases of substantial assets, you may add one other safety measure, “the Trust Protector.” The trust protector’s sole function is to hire and fire trustees, at will and without explanation.

3.

“Beneficiaries” The beneficiaries is the reason for the trust (contract). Your beneficiaries are the guys that will enjoy the benefits of your trust assets. They include, wives, children, grandchildren, charitable organizations of every color and variety. The length of your beneficiaries is unlimited. Beneficiaries could include the original grantor, but that would be self defeating. Generally, trusts are irrevocable. The grantor gives-up his assets to gain asset protection, elimination of probate, elimination of estate taxes, and gain certain uncommon tax advantages. Any degree of control by the grantor will render the trust revocable and subject to court discretion. The period of time of the trust depends on the selection of your trust’s legal jurisdiction.. Most states and countries have rules against “perpetuities.” That’s to say that your trust must have an end.

That’s the quickie on trusts. The trust document (contract) can be as little as three pages and as long as fifty pounds of paper. The more complicated you make it, the more complicated it is to administer. Simplicity is the key.

Trust assets may include, your personal residence, your investment account, other real estate, your business, limited only by your valuable assets you wish to contribute to your trust.

The trust generally obtains a federal identification number and files it’s own tax return. Distributions to beneficiaries, may or may not be taxable, depends on the nature of the underlying assets.

Finally, a trust may be a business, however it’s difficult for others to do business with you, since the trust is really a “private contract” between the grantor, the trustee, and your beneficiaries. Your business partners would more likely ask for a complete copy of the trust agreement and they would have their attorney look it over. As a consequence, most will not do business with a trust, but they will do business with other recognized legal entities such as a Limited Liability Company, Corporation, partnership, etc. for which the trust may own.

An irrevocable trust, is an asset protection fortress when it’s the owner of your sub “S” stock, a limited liability company, the general partner of a limited partnership, the general partner of a family limited partnership, the shareholder of an international business corporation, or other recognized legal entities.

https://www.barclayswealth.com/insights/volume12/future-attitudes-to-later-life.htm#header

The research has highlighted an interesting and, perhaps, unexpected phenomenon amongst wealthy individuals across the world. Instead of planning a conventional retirement or making plans to retire early, most of our respondents aspire to keep on working in some form – to become a Nevertiree rather than a retiree.

 

Some 60% of respondents say they envision always being involved in commercial or professional work of some kind, whatever their age.