Investments

Investment Products

At MWC Group, we have unparalleled access to an extensive range of investment products. This enables us to help our clients fully diversify their portfolio of assets to a high degree to achieve quality portfolio performance that is not typically available from high street retail banks. We have the unique ability to provide our clients with direct access to the fixed income capital and structured product markets, money market instruments as well as global equities & commodities to ensure that when you decide to seek our advice your risk/reward can be optimised.

We are able to provide our clients with access to the following selection of investment instruments. We offer international access to these instruments in various currencies.

Cash

A short-term investment instrument, often generating low rates of return compared to other investments in return for quick access and liquidity.

Risks:

  • Inflation erodes the real purchasing power of cash over time. If inflation were to average 3% p.a. over your deposit rate, then the real value of cash would decline by 50% over a 24 year period.
  • Default – Deposits are at risk if the borrower defaults. However deposits are often backed by governments. Coverage is normally capped and varies country to country.

stock market pricing abstract

Collective Investments

This instrument comes in several forms and its uses vary. Also referred to as mutual funds or unit trusts these instruments were created to allow retail investors to diversify their investments and be able to access markets that were previously out of reach to them at a much lower cost. This instrument thereby avoids expenses in terms of transaction fees incurred during individual trades. If you are using active trading strategies employ an investment manager to help manage risks and utilize market opportunities.

Collective investments or funds are a popular means of investment in countries with high levels of education & wealth. Globally over USD 26.8 trillion of wealth remains invested in collective investments within 55,000 open-end funds as of 2012 according to the Investment Company Institute Statistics for 2012

Regulation

Europe adopted a regulatory framework for collective investments in 1985 known as “Undertakings for Collective Investment in Transferable Securities” (UCITS) to develop a standardized regulatory approach to these instruments within the European Union. In principle a collective investment that has UCITS standards can operate freely within the European Union as long as it’s regulated within one member state. The requirement under this framework is that Assets must be held with a third party trustee or custodian which is not part of the management group. This third party is required to report to the regulators each quarter.

Several types of collectives exist and these include the following:

(a) Fund of Funds – This is a mutual fund that invests in other mutual funds. This type of instrument allows investors to achieve diversification and appropriate asset allocation with investments in a variety of fund categories all of which are collected under one fund. However operating expense of such a fund carries double for an expense that is included in the expense figures of the underlying funds.

(b)  Equity Funds- This collective fund creates capital growth over time with the accumulation of dividends and the growth of stocks. Equity funds can be growth or value- focused or may vary depending on geographical focus, sector focus or focus on small cap or large cap companies. Fund performance is usually measured against a benchmark index such as the MSCI (Morgan Stanley Capital Index).

(c)   Exchange traded funds (ETF)- This type of collective fund is a passive investment which is not usually managed by a fund manager and can be used to track markets. The low cost of this fund which can hold varied assets such as bonds, stocks, commodities or derivative instruments make this attractive. ETF’s are high on liquidity and trade on global stock exchanges including the LSE or NYSE

(d)  Money Market Funds- These funds are low on risk and typically have different categories. The safest money market funds own a collection of treasury bills which are short term obligations to a government such as the US government with terms of 7 days to 1 year. Other common money market securities are Certificates of Deposits, Commercial paper as well as Municipal notes.

(e)  Bond Funds- These types of funds are structurally similar to equity funds and have a huge variety of geographic, sector possibilities. Bond funds are generally known to be on the conservative end of the risk scale however this too can vary. Performance can depend on currency movements, changes in interest rates and sovereign debt ratings.

Structured Products

These are investment vehicles based on or derived from a single security, a basket of securities, an index, a commodity, a debt issuance and/or a foreign currency. Structured products tend to have a fixed maturity date and are created in such a way as to offer specific risk-return profiles. Several varieties exist including: protection of the principal–when held to maturity, lower risk than investing in the underlying asset directly. Others do not guarantee principal, but may be able to provide a partial buffer against loss or offer the potential for increased returns on your portfolio.

Derivatives

This instrument refers to a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties. The value of this instrument is determined by fluctuations in the underlying asset. Some common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.