Sunday 10, February 2013   |   making more of your money

Portfolio 2015 How to invest now to have a healthy portfolio by 2015

  • 8  A bumper year for Rolls-Royce
  • 16  Fascinating Facts about ultra wealthy…
  • 26  Investing in Africa
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A bumper year for Rolls-Royce

Rolls-Royce turned in record sales for 2012, selling more cars than any other year in the company’s 108-year history, setting a new sales record for the third year in a row. Not that we are in mass production territory here – the company sold a total of 3,575 Ghosts and Phantoms last year.
The luxury car marque sold strongly across the world but with notable gains in the Middle East, where sales were up 26 per cent and specifically in Saudi Arabia, where sales rose 63 per cent. In fact, Abu Dhabi Motors, the Rolls-Royce dealership in, you guessed, Abu Dhabi and Al Ain, was the number two dealership in the world, beaten into second place only by Beijing as China’s wealthy also took to luxury on wheels.
In fact, the Abu Dhabi dealership was named Global Dealer of the Year for 2012 at the annual Rolls-Royce World Dealer Conference, edging out competition from Beijing, London and New York for the title. Abu Dhabi once again held the number one spot in Bespoke Rolls-Royce vehicles,
boasting the richest Bespoke specifications, and developing creative vehicle concepts specifically for UAE customers.
2012 marked another record overall for the Rolls-Royce Bespoke personalisation programme, a service with Rolls-Royce’s legendary hand-craftsmanship and attention to detail at its core. Nearly every Phantom family model (95 per cent) and three out of every four Ghosts (73 per cent) left the Rolls-Royce factory with some element of Bespoke personalisation. Sales were also enhanced by several exceptional Bespoke collections in 2012, including Phantom Coupé Aviator, Art Deco, and Ghost One Thousand and One Nights.
Torsten Müller-Ötvös, Chief Executive Officer, Rolls-Royce Motor Cars, told Robin Amlôt, “We had an outstanding year in spite of the challenges we faced, and Rolls-Royce now leads the ultra luxury market by some considerable margin.” He went on to describe Rolls-Royce as ‘a feel-good product’, saying, “Many of our customers reward themselves for outstanding achievements in their own businesses or to celebrate certain occasions,”
adding that Rolls-Royce is in a sense ‘not a car business, it is a luxury goods business’.

In fact, you may be surprised to learn that the boss of Rolls-Royce candidly admitted, “Nobody needs a Rolls-Royce to get from A to B.” What makes a car that takes anything between 500 and 1,000 hours to build is the craftsmanship, the materials and the quality, all ‘the best that money can buy’.
And that is reflected in this claim that Rolls-Royce is one of the few, indeed perhaps the only automobile manufacturer to be in a position to make: Müller-Ötvös said, “Over 75 per cent of all the cars ever built in the 108-year history of Rolls-Royce are still on the road – that is a clear indication of quality.”
Müller-Ötvös refuted the use of the term ‘crazy’ when asked about the more unusual requests put to the Rolls-Royce Bespoke programme, preferring to describe customers as ‘individual’, citing the following, “Walk down the line at Goodwood [home to Rolls-Royce’s manufacturing facility] and you will
see lots of different, very interesting colour combinations. You, as a typical English gentleman may say, ‘Oops. That’s not my colour!’ But take, for example, a bright orange Phantom Coupé to the Middle East and you will see it in a different light and I mean that – the light in the Middle East is different, such cars look stunning in this environment compared to how they would look under the greyer skies of the UK.
“We have had customers asking us to build a safe into the car, or a humidor that can accommodate 300 cigars; we embroider family crests and build bar sets around specially commissioned glasses.”Finally, what does the future hold for Rolls-Royce? Müller-Ötvös is ‘cautiously optimistic’ for 2013, noting that parent company BMW Group does not pressure him to grow sales volume. He believes the car will continue to have ‘presence’. It will continue to be ‘the best that money can buy with precision engineering, fantastic material and attention to detail – this will not change’.

 

REVEALING THE WRAITH
Rolls-Royce Motor Cars is presenting its new model, the Rolls-Royce Wraith for the first time at the Geneva Motor Show on 5 March 2013. First deliveries are expected in the fourth quarter of the year. The launch revives one of the most famous Rolls-Royce names first used in 1938 but the new Wraith is a shape that Rolls-Royce as a brand has never seen before. “Wraith alludes to an almost imperceptible but powerful force, something rare, agile and potent, a spirit that will not be tethered to the earth. It is the perfect name for our new model.” claims Müller-Ötvös.
The new car aims to embrace the very finest things in life – elegance, beauty, refinement and luxury – shaping the future of Rolls-Royce, building on the success of Phantom and Ghost ranges. In the last decade the name Phantom has become synonymous with luxury. The model’s launch in 2003 heralded the marque’s return to form.
Ghost followed in 2009, reviving one of the most celebrated names in motoring history. The return of the Wraith was perhaps an inevitable choice to make.
Derived from Scots dialect, the use of the name ‘wraith’ follows traditional Rolls-Royce nomenclature in drawing ethereal inspiration. However, it also hints at a sense of darkness, something a little more ‘menacing’ than the stately presence of the Ghost and the Phantom.
Launched in 1938, the first Rolls-Royce Wraith featured a marriage of dynamic power delivery and hallmark luxury, an approach emphatically endorsed in Britain’s Autocar shortly after the car’s debut:‘...it seems of little consequence what the precise maximum speed figure is when such astonishingly easy and completely effortless running is available at, say, 75 mph.”
Times… and performance… have moved on, yet Rolls-Royce believes the 2013 Wraith embodies the spirit of adventure shown by the Hon. Charles Stewart Rolls, one of the company’s founding forefathers and a man who indulged a passion for innovation, engineering and, most importantly, adventure. Rolls was a passionate racing driver, balloonist and aviator, winning the praise of King George V, who hailed him the ‘greatest hero of the day’ on becoming the first person to cross the English Channel and return non-stop in a flying machine.

Fascinating Facts about ultra wealthy Indians

Fascinating Facts about ultra wealthy Indians


From cricket to accountancy, 11 things you probably didn’t know about Ultra High Net Worth Indians and Non-Resident Indians


1. Manufacturing is statistically the most viable path for becoming an Ultra High Net Worth (UHNW) Indian.

2. The second best way to become UHNW in India is Banking and Finance.

3. Philanthropy plays a major role in UHNW Non-Resident Indian (NRI) legacy decisions.

4. Top 10 Jobs: Manufacturing, Finance, Construction, Textiles, Non-Profit, Pharmaceuticals, Property, Chemicals, IT, Mining.

5. The University of Mumbai has created more UHNW Indians than any other domestic university.

6. More UHNW Indians went to The Institute Of Chartered Accountants in England and Wales than Harvard.

7. Harvard is the most popular university for Non-Resident Indians.

8. The most popular hobby for UHNW Indians is not cricket. It’s reading!

9. The average UHNW NRI is 56 years old with a net worth of $214 million.

10. The average UHNW Indian is 55 years old with a net worth of $69.5 million.

11. There are two Indian billionaires for every one NRI billionaire.

Portfolio 2015 How to invest now to have a healthy portfolio by 2015

Your Portfolio in 2015

What you should be doing now to have a healthy and profitable portfolio by 2015.

What should you be focusing on in 2013 in order to have a great portfolio by 2015? It’s all about equities according to some experts.
Johannes Jooste, Head of Strategy for Europe, Middle East and Africa (EMEA) at Merrill Lynch Wealth Management, says investors should position for the “great rotation” out of fixed income and into equities that he believes will happen in 2013.
“Growth should begin taking over from policy as the key focus for investors next year. This leads us to favour equities over bonds in 2013. The notable valuation gap between the two asset classes, now at its most favourable level for stocks in over 25 years, adds to our conviction here.”
Jooste says the economic and market outlook for 2013 is brighter than in 2012. He sees increased evidence of the Federal Reserve’s progress in rekindling the US economy and even a gradual Euro zone recover in prospect during the second half. In addition, in China GDP growth is forecast to improve.

INTO EQUITIES
There are four main ideas that are driving portfolio performance over the next three years, says Jooste. “First, new sources of income form a pressing need with money market interest rates so low. Second, consumer power is blossoming in emerging economies. Third, some unloved assets, such as European equities, have been oversold during the financial crisis and could return to favour as solutions to the European crisis emerge. Finally,  improvements in technology and labour costs will support multi-year growth themes. For example, a more competitive labour force is ready to drive a US manufacturing revival much further.

1. New sources of income
Diversifying income, eg, dividend growing equities “By broaching the idea of Porfolio 2015, we are trying to get investors to think along the lines of
changing their risk profile. Subject to a little bit of regional disparity, certainly in Europe and the US, our investor base has been very conservative
post the crisis, overweight with fixed income.
In other regions, Scandinavia for example, and certain parts of Asia, it’s not quite the case; they’re not as so defensively positioned but nonetheless we see there are some themes that investors should take account of. With stocks, we split it into two, stocks with growing dividends against stocks that just have high dividend yields. At the moment we’re looking to avoid dividend yield risk because they’re relatively expensive. We think the ones that are going to grow their dividend over the next three to four years are priced cheaply by the market, so that’s the first thing to go and do.

2. Emerging market consumers
New drivers of global growth, eg, emerging middle class consumers

“Here’s one of the reasons why we see growing dividends. In Asia Pacific, currently 28 per cent of global middle class consumers reside in Asia Pacific
compared to 66 per cent projected for 2030. That’s going to be a massive demographic influence on the way you want to position your portfolio. So, consider companies that have direct exposure to emerging market spend.”

3. European equities
Unloved assets, eg European assets with attractive risk premium
“If you take the view that we do that Europe is not going to break up and that there is going to be support for Italian and Spanish bonds, at some point you also get your head around the fact that five per cent for Italian paper is the right levels for investing there, as an example of unloved assets, there’s quite a few of these around. One other area might be US commercial real estate. In Europe, the landscape is littered with small cap sectors in specific countries that are completely undervalued, unloved and probably cheap. We’re not saying fill your portfolio with these types of assets in 2013, but the idea is to have these on the radar screen for when an opportunity presents itself.”

4. Technology and labour
Secular growth eg, the US manufacturing renaissance
“Another going forward, is good old US manufacturing companies. They’re massively unfashionable because they’re so boring, they make stuff that no one seems to want outside the US but in the last decade they’ve become hugely competitive in unit labour cost so even though it might be a very average company making boring products; it is doing so very cheaply. Like Mr Buffet says, there’s no such thing as a bad company, just a bad investment. So if you can get something boring at a cheap price, you might do quite well.”

In sum, the focus is on capturing strategic opportunities in the next few years and understanding that fixed income is more risky than it looks. One other theme to bear in mind, says Jooste, is inflation.
“In regions outside of Europe, inflation is not dead despite lots of Europeans thinking it has died. In fact, it’s just in hibernation and you do need to think of ways to hedge against that. With regard to your portfolio, really start thinking about inflation, not as a tactical problem but as a strategic issue as the basis of your asset allocation. Inflationary bonds are an easy way, or holding gold in your portfolio, whatever, start thinking about inflation as a long term theme,” Jooste says.
“Here are the things that we are trying to get into the mindset of investors, it’s the end of the multi-decade bond bull market, it’s coming to an end, having lasted for 20 years. Expect the structural case for equities to begin to dominate slowly but surely.”

Investing in Africa

Investing in Africa


Is Africa the new emerging market? James Thomas, Regional Director at Acuma Independent Financial Advice, thinks the huge continent is showing all the signs...

 

Africa. If you are of a certain age, the word conjures many negative images. People starving, drought, war, civil right movements; whichever part of Africa you looked at, be it north, south, east or west, there were major issues. However, over the past 20 years or so, things have changed, and generally for the better. Yes obviously there are still issues, not least the governments overthrown in various North African countries, and there are parts of Africa that are still very dangerous, but beneath all of this, there have been huge strides made to improve the whole continent.
Africa is now at the point that it’s being looked at for its investment opportunities. I should state right now, that this is still very much a frontier zone, that is to say it cannot yet be classified as an emerging market, so this brings with it increased risk, and the potential for volatility.
The market is still relatively small, with Africa as a whole only counting for three about one billion people. It is rich in natural resources, including platinum, gold, diamond, and oil and gas.
During the past decade, while the developed world has been suffering financially, Africa has grown significantly. Indeed in 2011 Ghana was the best
performing economy in the world, returning 22 per cent. Africa’s total GDP has now crossed $1 trillion, and there are about 150 companies with market capitalisation of more than $150 million. As part of this growth, the continent’s population has seen its income grow, and with it the ability to spend that money to further fuel economic growth.

AFRICANS GO MOBILE

Africa has adopted the mobile phone, indeed land lines have almost been completely bypassed the continent, with growth rates of phone sales rising at up to 50 per cent per annum, but with relatively low penetration rates of around 30 per cent, so there is still plenty of potential for further
growth, in contrast to somewhere like the UAE where penetration rates are well over 100 per cent. Mobile technology is being used for much more than just calls, with Africa leading the way for mobile payment systems and microfinance. The financial services sector has also grown, with a number of banks now meeting international standards, with good rates of capital adequacy, low amounts of nonperforming loans, and with bank shares
offering attractive returns on investment and high dividends.
In addition to the potential financial benefits of investing in Africa, there can be a further reason to invest – one that helps one’s conscience. Certain funds give up a percentage of their profit and use reinvest this back into Africa, supporting microfinance projects that help people build their businesses.


CAVEAT EMPTOR
However, as with all new markets, there are many factors that you need to aware of. Firstly, two countries, South Africa and Nigeria, account for about 50 per cent of African GDP, so if you are not careful, you can find your investment overweight in these countries. Then there is the issue of liquidity. You need to be careful that if you invest, you know if you can get your money out when you want to sell. Buying through a fund will help with this, rather buying direct shares, and it will also assist with diversifying your investment.
While financial transparency and accounting standards have improved, there are still areas where it can be difficult to assess the true position of a company. To a certain degree, this can be overcome by investing via companies that are listed on established markets outside of Africa that transact most of their business in Africa.
In summary, there are many potential opportunities to benefit from in Africa, with returns that the developed world can only dream of, but as with any investment, you need to do your homework, understand the market, investigate any downfalls, and allocate a small portion of your portfolio to Africa.

For information on African investment
products please contact:
marketing@acuma.ae