BOI's Financials Fund

Any views re investing in phaze two of BOI financials fund. An article in The Independant says BOI staff invested 3m of the 25m in phaze one and "the objective on this fund is to invest in financial shares with no direct exposure to subprime lending but market has factored into their price regardless. It invests in banks like Deutsche bank, JP Morgan Chase, BNP, AIB and BOI...min investment 20K...fund expected to last 3 years...high risk but good potential???

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docker said:

Any views re investing in phaze two of BOI financials fund. An article in The Independant says BOI staff invested 3m of the 25m in phaze one and "the objective on this fund is to invest in financial shares with no direct exposure to subprime lending but market has factored into their price regardless. It invests in banks like Deutsche bank, JP Morgan Chase, BNP, AIB and BOI...min investment 20K...fund expected to last 3 years...high risk but good potential???

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Deutsche bank, JP Morgan and BNP don't have any sub-prime exposure??? Never mind CDO or other structured finance deals. Would like to meet the analyst who did the research on those banks

analysts are using very selective definition of sub prime, namely the US variety which the term was originally coined, however what about the 100% mortgages given out to irish and british homebuyers who are now facing negative equity, they are starting to walk away from properties they cant make repayments on, therefore these are also sub prime (but of course nobody is saying this, the only reason they are not calling it sub prime is because its not in the US. Another important point is that BOI recently announced big falls in revenue, therefore their really cheap valuations are not going to look so cheap when these new earnings are used in P/E ratios

Its true that earnings will be hit. However 100% mortgages wont effect AIB for example too much, only 4% of their earnings are are from Irish mortgages....although they do have much greater risk on their loans to commerical property developers....suppose regarding this fund key question is weather the sub prime crises and falling property values will really hit financials profits/earning by as much as their decline in share prices! (aprox 40%). For a short term high risk investment it seems very attractive to me also considering the average annual dividend yield is due to be 7%.