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Expat Investor : December 2008
NEWS Bottom dollar? No, it’s a bottom pound It’s a stockpicker’s market Yields on sterling corporate bonds are now breaching 8% and are attractive compared to history, says Fidelity International’s Ian Spreadbury, Manager of FIF MoneyBuilder Income Fund. As the prospects of an economic slowdown increase, he believes this is the environment in which many bonds will continue to prosper, provided investors tread carefully. Mr Speadbury’s comments came With the pound tumbling to its lowest level in five years, moneysupermarket.com is warning Brits abroad that now, more than ever, they should be using the best credit and debit card overseas. With the pound falling from 1.44 to 1.29 euros in the past year, and from 2.05 to 1.71 US dollars, those overseas need to ensure they don’t lose out by also being hit with hefty foreign exchange fees and transaction charges. SteveWilley, Head of Credit Cards, says, “While the weakness of the pound is of concern to holidaymakers and online shoppers, using the wrong foreign exchange product can be even more costly. “A credit card with purchase protection of 90 or more days is the best option for purchases overseas. Not only do the credit cards from the Post Office and Nationwide offer this, but they also have zero per cent purchase offers of three months and don’t levy foreign exchange fees. This is a far better prospect than most of their rivals that charge between 2.50 and three per cent. “The Nationwide Flex debit card is the best product for overseas cash withdrawals as there are no extra charges. In contrast, a $100 withdrawal with a Lloyds TSB debit card would incur a £2 transaction charge plus a $2.99 foreign Fast Facts 10160 Carelessness drives fear of fraud New research from insurer RSA has revealed organisations must urgently address rising fears that they are not adequately protecting their customers' personal information. According to the study, a staggering 90% of people in the UK think important personal information held by companies such as banks, retailers and online auction sites is not completely secure. Just as worrying is the fact that nearly half (46%) of Britain think their banks and retailers do not do enough to protect their personal details. The findings also revealed that people are becoming increasingly worried about the security of their personal information and the threat of ID fraud; 56% are more concerned about this than they were six months ago. And perhaps there is cause for worry.The research showed that over 868,000 people in the UK have accidentally left work documents or devices such as a laptop or Blackberry in a public place or on public transport. With a number of high-profile cases in the last year, it is not surprising that the vast majority of people (90%) do not approve of employees carrying customer's personal information outside the office. The survey also revealed that people believe that actions by company employees pose the greatest threat to their personal information. The chief concern was carelessness by company employees when disposing of confidential information, followed by a fear of fraud being committed by members at the recent Fidelity Investment Forum: “Investment grade corporate bonds held up pretty well over the last year, offering investors both much capital protection and good diversification to equities. Although we are now in a full-scale banking crisis, and I fully expect more bad news to come, much of this bad news is already priced in so we are seeing a potential entry point.” In particular Mr Spreadbury has identified some attractive senior debt in selected banks and financials, where he sees historically cheap valuations, although he remains underweight the sector overall. He is also focusing on higher quality asset backed securities, avoiding the lower quality debt, much of which has been marked down recently. “Our analysts have found some of staff. Third, in order of concern, was weak management leading to insufficient checks on the actions of staff. Top 5 tips to avoid becoming a victim ? When asked to reveal any personal identifying information, such as bank details, make sure you know how it will be used, if it will be shared and who you are giving the information to. Be wary of anyone that could be listening in or looking over your shoulder. ? Try not to carry too many personal identification information Online Brokerage for Offshore Investors • Trade Forex, Futures, CFD’s and Shares offshore • European, North American & Asian Stock Exchanges • Backed by TD Waterhouse and Fortis www.internaxx.lu Tel: (+352) 2603 2003 Your International Online Broker in Luxembourg Internaxx Bank S.A., 46a avenue J.-F. Kennedy, L-2958 Luxembourg, R.C. B 78729. Fast Facts 10005 December 2008 ? EXPAT INVESTOR 11 undervalued debt in certain banks and financials so I’ve been reducing my underweight here, generally being careful to be well diversified within the sector and to stick with the lower-yielding senior debt that receives comparatively more protection than the riskier subordinated bonds, some of which receive as little protection as equities. However, when we consider banks, we have to remember that they have lost or written off more than they have raised over the last year – $592bn compared to $443bn respectively – so it is far too early to make any general call about the sector as a whole. “Another big theme, and one that also demonstrates my cautious stance, is my exposure to asset backed securities. A good example is pub group Punch Taverns, which is principally financed by debt, of which the best-rated, AAA bonds have performed well but the riskier BBB bonds have been crushed down to around 60 pence in the pound. With AAA bonds representing around a quarter of all debt, the company would have to lose three quarters of its assets before AAA investors started to suffer. It’s a position I’m happy to maintain. “The main reason I am positive about corporate bonds is that we are likely heading towards an economic slowdown and this is exactly the environment in which fixed income investors can prosper. Credit spreads are as wide as I can remember and yields at 8% are very attractive when compared to nominal GDP, which is the long-run driver of corporate bond yields. Nominal GDP expectations are 5.1% and so when these data diverge in the way that they have now we know it could spell good news for fixed income investors.” Fast Facts 10161 and cards around with you, and you should never note down pins or passwords. ? Keep an eye on your credit report with all three credit reference agencies, such as Experian, Equifax and CallCredit. If you do find an error, no matter how small, make sure you follow it up and get it changed. ? Shred statements, bills and direct mail, don't just throw them in the bin. ? Always check bank statements and credit card statements thoroughly. Fast Facts 10162
January February 2009