Inside Money-Finance Making Your Money Work!

At one time in days long gone by portfolio diversification
it was very unusual if you had invested in mutual funds.
More and more however, diversification became the norm but
the problem was that with this came lack of knowledge and
transparency as to what was being invested in.

Furthermore buying and selling during trading was very
limited. And then, mutual fund holders were unable to
utilize options to either improve upon performance or reduce
risk from falling prices. Now though this has all changed.

With the advent of Exchange Traded Funds or ETF funds you
can now have diversification and these can safely be used by
investment veterans and beginners alike.

So, the most basic form of an ETF can be described as a fund
that contains a fixed stock selection. There are some like
the iShares S&P 500 ETF Fund (IVV) that mirror an index
and then there are some like the S&P Homebuilders ETF
(XHB) which only focus on one industry – in this case home
building and all things related.

With low fees, wide diversification and more active trading
ability, ETF’s have become very popular indeed. Added to
this you can also trade options upon ETF’s and its clear
what exactly you are investing in before you take the
plunge. Furthermore there tends to be a broad range of
companies that are traded within the ETF such as in the
S&P 500 ETF – 500 companies, unlike mutual funds which
are limited. ETF’s also have the lowest expense ratios of
all traded funds – even as low as 0.9% – because they are
rarely changed and thus incur few costs.

If you have mutual funds and you wish to sell you have to
wait until the end of the trading day and after the value of
the funds are calculated you will be sent your money. With
ETF’s you trade within the trading day and the buy or sell
is confirmed within an instant – either online or on the
telephone.

You can very easily short an industry using ETF’s. If you
purchase the put option you can profit from a market fall
while at the same time you are protected from any other
outcome. So all in all ETF’s offer so much more than the
traditional mutual fund and at the same time offer a high
degree of safety if you trade the options strategy.

At one time in days long gone by portfolio diversification
it was very unusual if you had invested in mutual funds.
More and more however, diversification became the norm but
the problem was that with this came lack of knowledge and
transparency as to what was being invested in. Furthermore
buying and selling during trading was very limited.

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Posted under Finance

If you are looking for a savings account there is now more
to consider then which banks is nearest your house. The
perks (and gimmicks) that are offered can be hard to pick
through. The marketing campaigns can be very persuasive and
most people just choose where they have their checking
account or the bank most convenient for them. Since we are
all different you probably should figure out what is best
for you before you go looking at the advertisements so you
don’t get convinced of a feature you don’t actually need.
Here are a few points of consideration to narrow your
choices.

• Frequency of Use – Will you be needing to deposit
  to this account daily, weekly, monthly, or longer? What time
  frame will you need withdrawals? If this is an emergency
  account will you have access when you need it? While many of
  the online savings accounts offer higher yields, they don’t
  have the accessibility of your neighborhood bank. Also, with
  yields so low you could just consider another checking
  account with a card you only get out for emergencies. Noodle
  exactly why you are using this account. This will make a
  good first cut.
• Interest Rate- Now of all the accounts you
  have to choose that meet your access needs pick the one with
  the highest interest rate. The only reason I would not
  consider interest rates is if you don’t intend on keeping
  this account for any amount of time.
• Perks- Now it’s time
  to fish for the goodies. They will be proudly displayed in
  all the advertisements and on the walls. They range from
  appliances, matched funds for the first few hundred dollars
  saved, higher interest rates on the first couple of thousand
  dollars saved, toys, neat saving tricks (like keep the
  change), and reduced rates on other bank products. You know
  what you like, have fun shopping.
• Education-This is often a
  missed opportunity, but some banks have very intelligent
  people working for them. If opening an account buys you a
  little time to ask questions every now and again to these
  educated financial advisors, this could be worth the price
  of admission alone. Just listen to your friends when they
  tell of a bank that did something great for them. Odds are a
  smart business person is behind that scene.

If you are looking for a savings account there is now more
to consider then which banks is nearest your house. The
perks (and gimmicks) that are offered can be hard to pick
through.

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Posted under Finance

Cayman’s mutual fund industry is proof of Darwin’s theory
that evolution takes place over long periods. Admittedly it
is taking years rather than millennia, however, the process
of modernizing the legislation governing Cayman’s mutual
fund industry appears to be a complex process.

Rapid growth in Cayman’s hedge fund industry is the backdrop
against which the current review of the regulatory regime is
taking place. The number of funds registered or licensed
with the Cayman Islands Monetary Authority (CIMA) has been
growing at a scarcely believable pace.

CIMA established a working group of representatives from the
Cayman Islands Fund Administrators Association, the Cayman
Islands Society of Professional Accountants, the Cayman
Islands Law Society and the Cayman Islands Bar Association
to evaluate the recommendations of CIMA’s own Policy and
Research Division which has examined the regulation of the
mutual funds industry.

The working group’s aim is to further improve the regulation
of the funds industry, with a view to striking a balance
between the demands of a competitive offshore financial
centre and the international standards requested of a
sophisticated offshore financial centre by a number of
international bodies.

It is likely that four, rather than two, categories of funds
will be established. The likely categories are a standard
retail Public Fund offered to the public (no minimum
subscription); Managed Private Fund with a licensed Cayman
fund administrator providing the registered office (minimum
subscription of US$10,000); Recognised Fund with equity
interests listed on a prescribed stock exchange or
licensed/registered in a prescribed jurisdiction and
Professional Fund offered only to professional investors,
with a high minimum subscription.

The name of Cayman’s “Mutual Funds Law” has caused
confusion, so the working group proposes to name the amended
Mutual Funds Law the “Investment Funds Law”. Those who had
trouble reconciling a hedge fund as being a mutual fund
should be able to accept a hedge fund is an investment fund.

A further proposal of the working group, whilst not intended
to save market participants money is likely to have that
result, namely the proposal to provide broader powers to
CIMA to waive the requirements for an audit for licensed or
registered funds. Instances where a fund was not launched or
where a fund is wound up with only a few investors are
examples of where such a waiver may prove desirable.

The above is just a flavour of the changes which can be
expected, it is not a complete list of all the likely
implemented reforms. Timing of the implementation is
difficult to predict, however the review process has been
going on for years and it may conclude soon, although the
new laws and regulations will need to be drafted and
approved giving time to prepare for the new regulatory
regime.

Previously Cayman’s regulators have been able to achieve the
delicate equilibrium, striking the right balance between
regulation and the needs of the funds industry and they are
intent on improving further an offshore jurisdiction already
in high demand. Their hope is that the Cayman Islands will
continue to be the natural selection of fund professionals.

Cayman’s mutual fund industry is proof of Darwin’s theory
that evolution takes place over long periods. Admittedly it
is taking years rather than millennia, however, the process
of modernizing the legislation governing Cayman’s mutual
fund industry appears to be a complex process. The name of
Cayman’s “Mutual Funds Law” has caused confusion, so the
working group proposes to name the amended Mutual Funds Law
the “Investment Funds Law”. Those who had trouble
reconciling a hedge fund as being a mutual fund should be
able to accept a hedge fund is an investment fund.

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Posted under Finance