The Montpelier Group were revealed to be planning to sell MPAS, in last months New Model Advisor, but a sale look unlikely after an auditor warned of potential problems with any sale. The auditors report found uncertainty that MPAS could continue due to ‘the nature and complexity’ of the investments held in the Sipps.

Managing Director of Curtis Banks, Richard Curtis played down those concerns however, and claimed he was ‘satisfied’ having examined the pension investments in question.

‘We have the capacity to cope with that book of business,’ he said. ‘There is a difference between what the company was in isolation,’

‘On its own, where it was, there were worries. But we have the experience to deal with them. We have looked at what the investments are and we are satisfied.’

Curtis also confirmed that the Financial Services Authority (FSA) spoke to both firms before the deal went ahead, making sure that both companies would benefit from the move. The move has bought Curtis Banking around 1,400 extra Sipps, and MPAS’s advisor connections.

Curtis went on to add that he felt the deal had made his business more secure, explaining, ‘I think that in this day and age it’s clear the FSA has a high expectation of Sipp providers.’

‘Firms need to have an infrastructure in place and be decently sized.  So this deal gets us to that sort of level.  We were viable anyway but this gives us critical mass. Sipps are a numbers game; the more income you have the better you are able to support your infrastructure.  This will reassure advisers that we have the infrastructure and are a decent size.’

Investment firm, Russell Investments celebrated 75 years as a financial services company yesterday, and launched their exchange traded funds (ETF) business in New York.

Managing Director of the new ETF business, James Polisson explained, “Russell aims to provide ‘next-generation’ ETFs that expand beyond traditional market offerings,”

The business will launch with six new ETFs on the table, which are designed to offer “focused, transparent and consistent exposure to US large-cap equities across six investment disciplines”.

The six ETFs have different themes, ranging from aggressive growth to growth at a reasonable price.

Managing director of the firms ETF distribution around the world, Andy Arenberg said, “We sought out the six most prevalent strategies that professional managers use to give investors access to actual investment approaches,”

The ETFs will track indices made up of firms in the Russell 1000 Index, and customers will have access to Russells dedicated ETF sales team. The marketing department will also be busy, with television adverts and internet and magazine adverts also planned.

The firm have also launched a new web-site with analytical tools for investors to monitor their ETFs. Russell already offer one ETF, the Russell Equity ETF, which the acquired when they bough US One earlier in the year.

The purchase of US One was swayed by their regulatory approved status, which meant Russell didn’t have to spend substantial sums going through the process of getting regulated to offer ETFs because US One already had.

Russell was founded in 1976, and they currently have over £100billion of assets under their control, advise customers on over £500billion worth of assets, and operate in 35 countries including the UK.

The new ETFs offered by Russell will charge a management fee of 37 basis points.

The Financial Services Authority (FSA) has warned consumers of the dangers of taking investment advice that does not factor in the level of risk they wish to take in their investment portfolios.

The Financial Services Authority revealed that investment risks were not properly taken into account in half of the individual investment files it examined in the two and a half year period between March 2008 and September 2010. As a result, clients were potentially exposed to a higher level of investment risk than they would have expected or desired, when reviewing or setting up investments with their investment adviser.

The FSA also emphasised the importance of other suitability criteria, in addition to risk levels, when advisers are formulating investments advice.

When responding to an investment enquiry from a new client, the first step a good adviser will take is to ask relevant questions to assess their desired risk level.

Risk levels are generally matched to six categories, ranging from the highly conservative ‘very defensive’  investor, who may be best suited to extremely stable cash or near-cash investments or savings products. Levels of risk then move through the other five categories, becoming gradually less conservative as they go: defensive, cautious, balanced, aggressive, and very aggressive.

The ‘very aggressive’ investor at the top end of the risk scale is he who feels comfortable with relatively high degrees of volatility in his investments, and may be happy to invest, for instance, in emerging markets such as China, Russia or Indonesia, in the hope of achieving high investment returns from rapidly growing companies there.

The FSA further recommended the use of properly formulated risk profiler tools, such as the Principle First risk profiler, as a good standard procedure which will ensure that advisers clarify each client’s attitude to risk.

Interest in ethical funds has surged during 2010, and promises to grow strongly over the coming few years, according to new data from the Investment Management Association (IMA).

Ethical funds investments accounted for £74 million in the third quarter (July to September) of 2010, up 25% over the same quarter in 2009, and compared to £64 million on average in recent quarters.

Interest in ethical investing is no longer limited only to those who wish to invest with conscience in the world’s most ethical industries and companies, according to the Investment Management Association. Many investors are building an ethical investment portfolio based purely on the track record of ethical funds, and good returns on investment. There is a huge unmet demand for advice and information on investing in an ethical fund, they said.

Commenting on the IMA statistics, Penny Shepherd MBE, UKSIF chief executive, which organised National Ethical Investment Week (7-13 Nov), said: “While these new statistics are very positive, research for National Ethical Investment  Week shows there is still huge unmet demand for modern green and ethical investment options. Although only 8% of savers and investors currently hold green and ethical investments, a further 37% say they will consider doing so in the future.

“Our research shows that we are entering a decade of financial responsibility, as more people consider how they can make money and make a difference in the world. Attitudes are changing from ‘greed is good’ to green is good.”

There are currently some 100 ethical funds available in the UK market, from a wide range of ethical investment companies.

For those seeking investment advice on a relatively safe investment, but still wishing for a better return than cash, investment bonds might be the ideal addition to their investment portfolios.

Bonds investments often require you to leave your money invested for 3 or 5 years, to achieve their stated rate of return. However, the term of the bonds investment does not have to be quite that long.

Coventry Building Society, for example, has just launched a 1 year fixed rate investment bond that offers 3.11% return to short term investors. However, this must be taken in context – given that the latest inflation rate is 3.13%, this bond may not keep your cash ahead of inflation, so that the real buying power of your money actually reduces.

This is why investing in bonds for the longer-term, which generally will bring you higher returns than short-term bonds, may be a better option.

A bond is a way of lending your money to the person issuing the bond. The most common types of bonds are those issued by governments (which are known as government bonds), and those issued by companies (corporate bonds). The risk involved is mainly that the bond issuer could fail, and be unable to repay your cash – which in the case of governments or large well-known companies is not very likely. This is why a well-chosen bond, as recommended by an unbiased and independent investment adviser, can be practically as safe as a cash investment.

There are bonds which pay out interest to you on a regular basis, during their term. These are termed income bonds, and interest can be paid directly into your bank account. Some bonds reinvest the interest you are earning back into the bond, so that it continues to grow, and return all interest, together with your initial capital, at the end of the bond term.

For those for whom even the slightest prospect of losing their money is too awful to contemplate, there are even guaranteed bonds, where you cannot get back less than you put in - even in a worst case scenario. However, you are still faced with the inevitable spectre of inflation, which will have taken a bite out of the real buying power of your lump sum investment, during the years it was invested in the bond.

As explained above, there are several key types of bond, and within each type there are many many providers and bond issuers to choose from. It is well worthwhile making an investment enquiry to take independent  investments advice from an expert who can look at the whole market, and identify those bonds most suitable to you.

Almost 90% of UK investors are working to stabilise or reduce the risk level of their investments, following the difficult market conditions of 2007 to 2009, according to a new report* this week from the Investment Management Association (IMA). The report highlights the value of  good investment advice, and the key role of the investment adviser in reviewing your existing investments.

While 61% of UK investors surveyed will add to their investment portfolios, either by further investment or my taking out a new investment product in the coming year, 45% said they are looking for ways to take less risk and 46% said they would be keeping their risk profile unchanged. Only 9% of investors would be choosing to take higher risk, in the search for a higher return, the Investment Management Association said.

With the assistance of an independent investment adviser, these investors will be able to access any of the growing range of guaranteed investments now available on the UK market. Guaranteed investments offer exposure to the growth potential of the stock market, but at no risk to capital – in simple terms, you are guaranteed to get back the full sum you put in.

Quality investments advice from an independent adviser will also enable more adventurous investors to identify investments whose potential may have even been enhanced as we emerge from the recession. Many funds and fund managers are now identifying undervalued opportunities in the markets.

The assistance of an unbiased investment adviser with a whole of market overview may be very beneficial to the 29% of investors in the IMA survey who were not confident about investing in the coming 6 months, as well as to the 34% who were upbeat about investment prospects.

*Source: IMA Investor Perspectives Survey 2010, surveying 2,100 UK residents currently holding one or more investment products.

MetLife Europe is to expand its range of investments products following its acquisition of American Life Insurance Company (Alico) on 1st November. MetLife will begin the expansion with the launch of a maximum investment plan (MIP), as the first of a suite of new investment and retirement products to appear in the coming year.

MetLife was the pioneer of guaranteed investment based on unit-linked guarantees in the UK market, and MetLife guaranteed investments such as the MetLife Guaranteed Investment Bond and the MetLife Income for Life Bond offer peace of mind to defensive investors, with a ‘no risk to capital’ guarantee.

MetLife Europe is part of MetLife Inc., a global insurance and financial services giant which is already the largest provider of life insurance cover in the US. The Alico acquisition will make MetLife a leading competitor in Japan, and significantly boost its European and UK presence as well.

The second product MetLife will launch is a Protected Growth Bond, due to come online in 2011.

Alico’s range of life insurance policies and the entire Alico brand will now be marketed under the MetLife name. The new MIP will be the first example of the synergies of the merger, as it will be issued by Alico but marketed under the MetLife brand.

The deal creates what MetLife terms ‘a global insurance and benefits powerhouse’ with operations in 60 countries, and serving 90 million customers.

MetLife UK’s managing director, Dominic Grinstead, said the acquisition would enable MetLife to ‘fully embrace the IFA and advisory marketplace’ in the UK, and that its guaranteed investment products ‘will provide greater certainty to investors’.

Stock investments are superior to investment in bonds, despite the general view that bonds investments are relatively low-risk, according to the world’s most successful investor, Warren Buffett.

Speaking at a conference for top US businesswomen organised by Fortune magazine, Buffett said of stocks investments: “It’s quite clear that stocks are cheaper than bonds. I can’t imagine anyone having bonds in their portfolio when they can have equities.”

For the world’s 3rd-richest man, with a personal net worth estimated at $47 billion in March 2010, low-risk investments may no longer be necessary – but even for the ordinary investor prepared to put their money away for a decade or two, the arguments for stocks and shares investments are what Buffett might call a ‘no-brainer’.

By charting the performance of a long-term investment in stocks and shares made in 1945, figures released recently by Scottish Widows shows that returns over a 60-year term were 70 times greater than investing the same sum as cash in a bank or building society account.

A sum of £100 invested in a building society account in 1945 would have been worth just £1,767 by 2006, according to Scottish Widows. Invested in bonds, the sum would have been worth £4,323.

However, the same £100 invested in the UK stock markets, as measured by the Barclays Equity Index and including dividends reinvested, would have grown to £125,243 over the same time period.

While bonds may be attractive for an investment of 5-10 years, as you are told in advance what your minimum return will be, stocks and shares investments are the clear winner in the longer term.

Warren Buffett’s investment activities are carried on through his investment company Berkshire Hathaway, which has been voted the world’s most respected company by the leading US business publication Barron’s Magazine.

Over 60% of those wealthy enough to retire tomorrow are not building a retirement into their financial planning, because they plan to actively work for the rest of their lives, according to Barclays Wealth.

Despite this, the need for financial planning advice and a solid financial plan is still at the centre of the working lives of these ‘Nevertirees’, driven by issues such as inheritance tax and succession, personal health, and the unpredictability of return on existing investments.

Barclays Wealth’s global survey found that the expectation of a period of leisure after our working lives is a primarily anglo-saxon and European tradition, focussed on the UK, Europe and North America.

Countries where social attitudes did not include a retirement, and where retirement was generally not mandated or encouraged by government policies, on the other hand, showed up the highest percentages of Nevertirees – in Saudi Arabia (92% of those surveyed declared they will never retire), UAE (91%), Qatar (89%), South Africa (88%) and Latin America (78%).

At the bottom of the scale for Nevertirees were Hong Kong/Singapore, the US, Japan, Spain and Switzerland. Barclays pointed out that Hong Kong and Singapore may have featured at the lower end of the scale as both areas have longstanding mandatory retirement savings plans.

The conclusion of the Barclays Wealth report “The Age Illusion” highlighted the ongoing need for financial advice, and stated that ‘a clear-headed assessment of financial needs and how to fund them is essential. Whatever the circumstances, the focus is likely to remain on careful planning, rather than a radical change in the way in which we plan for and fund later life.”

Credit Suisse has just launched a new series of investment funds including a FTSE 100 tracker fund, which holds all or most of the top 100 shares in the London stock market, but charges just 0.33% per year.

Tracker funds are generally a more economical type of  funds investment. They buy shares in various sectors and industries, in proportion to the current structure of the index, so that their performance follows the index very closely. On the other hand, while tracker funds do keep step with the index, they cannot achieve a higher return by outperforming it.

Unlike actively managed funds, tracker funds do not incur large dealing charges by buying and selling assets often, in an attempt to cash in on short growth surges in the market. Managing tracker funds is, therefore, a relatively cost-effective process, making them the least expensive means of investment in funds. Some trackers, such as this one from Credit Suisse, invest to fully reflect the proportions of the index, others pick one stock from each industrial sector in the index – a process known as ‘sampling’.

Actively managed investment funds, on the other hand, attempt to outperform their index by buying and selling stocks more dynamically and regularly. This gives them the opportunity to cash in on short-term growth in the performance of individual stocks. However, the much higher transaction costs involved mean that actively managed investment funds charge premium rates, when compared to index tracker funds.

At Principle First, we offer various options for investing in funds, including our tailored range of funds investment portfolios, which give ready-made options for investment in funds to suit each client’s risk profile.