Hibernians spectrum bond going through the floor

J

johnodkc

Registered User
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I invested 130k(geared) in Hibernians spectrum bond through a financial advisor, in June 06. It has taken a major hit and now stands @ 103k. I have an option of cashing my shares. What should I do? Hang in or take a hit of almost 30k now?
Has anyone else invested in the same?
 
Why did you choose this investment in the first place?
What was/is your investment timeframe?
What advice were you given on it?
From whom (independent advisor or a tied agent)?
Were you aware of the risk/reward profile of the investment?
How much of your overall wealth does this investment represent?
What other debts/savings/investments do you have?
Do you need the money now?
 
answer to questions:
Why did you choose this investment in the first place?
On advice of Financial Advisor

What was/is your investment timeframe?
5 yrs to begin with

What advice were you given on it?
Recommended as a good investment

From whom (independent advisor or a tied agent)?
Independent Advisor

Were you aware of the risk/reward profile of the investment?
I knew there was a risk, but didnt expect this!

How much of your overall wealth does this investment represent?
50%

What other debts/savings/investments do you have?
No major Debt. I have 100k in Stock market fund (Canada Life), which is also down about 7%

Do you need the money now?
I dont need right now.
 
Have you spoken to your financial advisor mentioned above about your concerns?

On the other hand if s/he just said that this fund was a good investment for 50% of your wealth without giving more pros/cons and balanced info then I would question their ability to dispense good advice. Is this person an authorised advisor or a multi-agency intermediary?

What charges (up front and ongoing) apply to this product?
 
Talked to next in charge. She was hinting @ withdrawing funds.
regulated by the Irish Financial Services Regulatory Authority (IFSRA) as a multi –agency intermediary and a mortgage intermediary.
Will get back regarding charges.
What do you think I should do?
 
Why would you think about withdrawing now,the markets are getting clobbered,of course your fund will be down

I'm sure you were told when investing that this bond was only suitable for 5+ years investment horizon,this bond is invested in various funds
Find out what these funds are ,I am sure it is on your documentation, and check that the drops are in line with the market

There should be a much stronger likelihood that the funds will bounce back over a future period then that they will fall further
 
johnodkc said:
What do you think I should do?
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I would not panic and withdraw everything in a kneejerk reaction to market volatility. But then again I would not have 50% of my overall wealth in a single investment either.
 
I suspect that you have invested in a property fund within the range of Hibernian funds.

The Hibernian Property Fund had a once off reduction in value of 4.7% (9.4% for the geared version) back in July. This is somewhat artificial and is designed to deter people withdrawing their money. When the funds inflows and outflows match each other, this artificial reduction will be removed.

It also has an early exit penalty of around 4% this year.

So if you don't need the money, you should stay in it.

You should ask the broker to explain why he recommended this fund. If you feel that you were misled, you should complain. And if you don't get a satisfactory response, go to the Ombudsman.

Brendan
 
Yes she mentioned that there was a reduction. If it happened in July should I not have been informed?
Are advisors obliged to relay such information immediatley?
 
I Dont need the money right now. My Financial Advisors now say they are transferring all their clients money into cash. I guess this will decrease the value even more. If I Hang in for 5 years , what is the chance that I will have any kind of reasonable return?
 
johnodkc said:
IMy Financial Advisors now say they are transferring all their clients money into cash.
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What relevance to you is what other clients of theirs are doing!? They should be assessing your specific needs on an individual basis and not just telling you to follow the herd. Sounds to me like your FA's advice is a bit ropey! Maybe you should ditch them and find somebody who is more helpful and better informed/skilled?
 
"my Financial Advisors now say that they are transferring all their clients money into cash"??????

If I was a client this would really worry me:
  • Why transfer into cash after the value has fallen, thus crystallising the notional loss
  • How long will they stay in cash?
  • When will they re-invest into the market?
  • Are they getting out at the bottom (or thereabouts) and will likely only re-invest after the market has risen again ( a double-whammy)
  • Are they suggesting that they will switch into cash irrespective of what their clients long-term objectives are?
This to me does not sound like good "advice". Before taking any action, the questions I would ask are:
  • Have your circumstances changed such that you need the cash now?
  • Has your investment time-frame changed?
If you can take a 4 to 5 year view (as you suggested originally) then a kneejerk reaction (getting out at the bottom - perhaps) probably represents a poor decision.

Its a cliche (I know), but investing is about "time" not "timing". If your advisor is suggesting that they can "time the market" (which they clearly did not do over the last few months) then their are loiving in a fools paradise (I certainly would not join them).
 

heh, I'm back and finding myself strongly agreeing with the ClubMan! Think that's a very good point. Would be nice if he was rebating some of his take in acknowledgement of the disappointment, sharing the pain and all that. That said, it would be worth establishing the exact cause of the drop; is it connected to a drop in value of one particular property or is the general gapping in values being seen everywhere at the moment? Even the very biggest and oldest funds are raising lots of cash at present and marking down values in order not to prejudice investors who stay in their funds. And December could be choppy too as the interbank market rates will possibly spike up, hurting leveraged investors yet more...but it might be worth riding this out if the overall book of underlying assets is still sound.
 
I dont need the cash right now, and the 5 yr time frame remains-may be even longer if the conditions are right.
I guess the drop in value is connected to rising interest rates.... and drop in invester confidence.
 
who says we are at the bottom of an Irish property market adjustment - the brokers could be right in advising client to cash ahead of further drops
 
derryman said:
who says we are at the bottom of an Irish property market adjustment - the brokers could be right in advising client to cash ahead of further drops
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'tis true ^^ - that's why I'm keen on drilling down into the underlyings. If they're attractive properties, then for the commercial tenant, they can't have too much room to manoeuvre so might give you some comfort regardless of overall market tops and bottoms, cos even in a downdraft, some things always stabilise or even rise.
 
derryman said:
who says we are at the bottom of an Irish property market adjustment - the brokers could be right in advising client to cash ahead of further drops
Click to expand...
Yes - but (seemingly) advising a client to cash in because everybody else is doing it makes no sense. The FA should be (and should have in the past) done a property fact find and financial review to assess the individual's specific needs rather than telling them that product X was a "good investment" and now that it has fallen that they should cash in. Of course we are only going on one side of the story here so maybe there is more to it than that but from the info posted the FA sounds useless to me.
 
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