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Diversifying Your Portfolio

Diversifying Your Portfolio . Chris Rose Crown Cycling Circle Investment Club. Agenda. Introduction Consider the true aims of an investment club The need to diversify The advantages of an investment club Alternative investment opportunities Exchange Traded Funds and Commodoties Fine Wine

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Diversifying Your Portfolio

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  1. Diversifying Your Portfolio Chris Rose Crown Cycling Circle Investment Club INVESTMENT CLUB NATIONAL CONFERENCE 2007

  2. Agenda • Introduction • Consider the true aims of an investment club • The need to diversify • The advantages of an investment club • Alternative investment opportunities • Exchange Traded Funds and Commodoties • Fine Wine • Gold • Property • Others • Getting started making alternative investments • Summary INVESTMENT CLUB NATIONAL CONFERENCE 2007

  3. Introduction • It doesn’t just have to be about stocks ! • Always lots of reasons NOT do to something • fear of the unknown INVESTMENT CLUB NATIONAL CONFERENCE 2007

  4. INVESTMENT CLUB NATIONAL CONFERENCE 2007

  5. Aims of Our Investment Club • Make money • Learn • Have Fun ! ……………………BUT IN WHAT ORDER ? INVESTMENT CLUB NATIONAL CONFERENCE 2007

  6. The Need to Diversify Balance your portfolio according to your risk profile …… but keep it interesting ! INVESTMENT CLUB NATIONAL CONFERENCE 2007

  7. Why Diversify Within an Investment Club • Spread risk of club portfolio • Broaden the spectrum of investments to improve retention and interest • Produces great learning opportunities • Explore the unknown • Leverage knowledge and experience of members • Curb over enthusiastic and irrational decisions • Make Money ! INVESTMENT CLUB NATIONAL CONFERENCE 2007

  8. Alternative Investment Opportunities • Exchange Traded Funds / Commodities • Gold • Property • Fine Wine • ……………others INVESTMENT CLUB NATIONAL CONFERENCE 2007

  9. Exchange Traded Funds (ETFs) • What is an ETF / ETC • Reducing risk • Accessing opportunities • Low administration costs • High Liquidity INVESTMENT CLUB NATIONAL CONFERENCE 2007

  10. Examples of ETF’s • UK property : iShares FTSE UK Property Fund (IUKP) • China : iShares Xinhua China 25 (FXC) up 120% in Sept 06 – Sept 07 • Brazil : Up 95% in last 12 months www.ishares.co.uk www.etfsecurities.com INVESTMENT CLUB NATIONAL CONFERENCE 2007

  11. Investing in Fine Wine INVESTMENT CLUB NATIONAL CONFERENCE 2007

  12. Investing in Fine Wine Why wine ? • Depreciating asset • Established market • The model is well understood • Fun doing the research You can drink it ! INVESTMENT CLUB NATIONAL CONFERENCE 2007

  13. Investing in Fine Wine How it works • Initial Finite supply • Growing demand • Later a dwindling supply …All leading to an increase in the value INVESTMENT CLUB NATIONAL CONFERENCE 2007

  14. Investing in Fine Wine Picking a good vintage • Broker recommendation • Robert Parker Score 95% http://www.erobertparker.com/ • Wine Spectator Magasine • Online research – www.decanter.com INVESTMENT CLUB NATIONAL CONFERENCE 2007

  15. First Growth 1990 Vintage Source : Morgan Aston Ford INVESTMENT CLUB NATIONAL CONFERENCE 2007

  16. First Growth 1990 Vintage INVESTMENT CLUB NATIONAL CONFERENCE 2007

  17. Investing in Fine Wine Practical issues • Find a good broker • Storage • Market reports • Low Commission • Proactive I use Morgan Aston Ford : http://www.mafltd.dircon.co.uk/ INVESTMENT CLUB NATIONAL CONFERENCE 2007

  18. Gold • Gold is a commodity and traditional home for our money in times of trouble, easy to track and highly liquid. INVESTMENT CLUB NATIONAL CONFERENCE 2007

  19. Gold Chart INVESTMENT CLUB NATIONAL CONFERENCE 2007

  20. Accessing the Gold Krugerands under the bed of every member ! • Gold Coin – Sovereign or Krugerand • Gold Bullion • Mining eg HOCHSCHILD MINING PLC (HOC) • ETF – Gold Bullion Securities (GBF) • Superb online tutorials INVESTMENT CLUB NATIONAL CONFERENCE 2007

  21. Gold Bullion • Bullion - • “Good Delivery” bars • Physical possession • Part or whole bars • Online – eg www.bullionvault.com INVESTMENT CLUB NATIONAL CONFERENCE 2007

  22. Property • UK property vs Overseas property • Location location location ! • Controlling the passion • The structure of the club and ownership • Poor liquidity • Long terms costs of ownership • Use ETF ? INVESTMENT CLUB NATIONAL CONFERENCE 2007

  23. …………..Others • Commodities http://www.etfsecurities.com • Venture Capital Trusts • Film • Land ……………… INVESTMENT CLUB NATIONAL CONFERENCE 2007

  24. Be Brave ! INVESTMENT CLUB NATIONAL CONFERENCE 2007

  25. Where to Start • Consider the asset allocation of the club • What type of alternative investment inspires you • Detailed research into an investment • Club structures • Goals • Exit strategy • Invest and Monitor INVESTMENT CLUB NATIONAL CONFERENCE 2007

  26. Summary • Stocks and shares are not the only form of investment opportunity open to investment clubs. • You will gain from the learning experience, you will have a lot of fun, and it may even make a profit ! Health warning : All investments may go DOWN as well as up and these ideas are no exception i.e. don’t blame me ! INVESTMENT CLUB NATIONAL CONFERENCE 2007

  27. Challenge for WMS 2008 Make at least one alternative investment. INVESTMENT CLUB NATIONAL CONFERENCE 2007

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