Some advice needed on a big loss

Cat-man

Hi Guys

First post here being a long time fan of this board hope someone can help me out here.

ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.

So about about a month ago l got a letter from friends first saying we are pleased to tell me :mad: that the 20,000 l invested is now worth 11,200 :-(

This is a geared property and is a for 5 years minimum it states in the letter that l cannot surrender this policy until the 5 years is up but in exceptional circumstances friends first will consider a request.

My gut feeling is that l should try and get out of this now so my question is can l get out of this? and what do they mean by exceptional circumstances.

Any advice will be greatly appreciated, I really hope someone can help me.

thanks in advance..

Cat-man

dunkamania

Whether or not you should cut out now, I just dont know.

As for exceptional circumstaces, I would go with some kind of sob story, but I wouldnt be too hopeful. I am guessing they would be very reluctant to approve redemptions given the historical performance. It reduces the cash available in the fund, and its unlikely that there will be many shareholders waiting to take your place.

I would be reluctant to advise anyone who invested in a specialist property fund like this to take their cash after such a short (in terms of property investment) period of time. Can you say why this product was recommended to you and why it was deemed suitable to your circumstances in 2007?

You should probably have a look at how this investment fits into your overall portfolio in term of your exposure to Irish Commercial Property and other asset classes (I am assuming that the product your in is the one linked to the four SuperQuinn properties.) I would hope that this is not your life savings or that it represents a large percentage of them(?).

These funds are automatically going to take a big hit in the first year as the costs of acquisition and set-up (about 12%) are applied to your cash. Also, the downside of gearing is that any negative growth is magnified on the value of your investment, so a 5% reduction in the value of the property means a 15%+ loss to you (66% LTV).

Have you spoken to the broker and sought his/her advice?

irish_bob

Cat-man wrote: »

Hi Guys

First post here being a long time fan of this board hope someone can help me out here.

ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.

So about about a month ago l got a letter from friends first saying we are pleased to tell me :mad: that the 20,000 l invested is now worth 11,200 :-(

This is a geared property and is a for 5 years minimum it states in the letter that l cannot surrender this policy until the 5 years is up but in exceptional circumstances friends first will consider a request.

My gut feeling is that l should try and get out of this now so my question is can l get out of this? and what do they mean by exceptional circumstances.

Any advice will be greatly appreciated, I really hope someone can help me.

thanks in advance..

Cat-man

thier is usually a bail out penalty charge with funds , its usually about 5% , oh and btw , no one ever makes any money on investing in funds , they exist only to make money for fund managers and commision for the sales person who sold you the fund , thats right they are sales people even though they wear a label that says financial consultant , because people mainly invest in funds as a means of avoiding tax , the fund managers know that making a profit is secondary

kaiser sauze

irish_bob wrote: »

thier is usually a bail out penalty charge with funds , its usually about 5% , oh and btw , no one ever makes any money on investing in funds , they exist only to make money for fund managers and commision for the sales person who sold you the fund , thats right they are sales people even though they wear a label that says financial consultant , because people mainly invest in funds as a means of avoiding tax , the fund managers know that making a profit is secondary

:rolleyes:

kaiser sauze

As GerardS has advised you, do not take out your money now.

The fact that you are panicking at this stage indicates to me that you have not been properly advised of the risks, and the likelihood that, in the first year especially, the investment will be worth less than invested.

I know it is easy for me to sit here and say this, but it is worrying to me that your attitude to risk has been improperly gauged by the advisor you dealt with.

dunkamania

People seem to be saying the op should hold on, invest long term and ride out the cycle. This is usally good advice, but since the investment is in a geared fund, more analysis is required. Depending on the level of gearing, quality of funding, and the liquidity within the fund it may be best to cut your losses.

Hypothetically, if the fund was made up of 80% leverage and 20% equity, then a 9% drop in asset value would have caused the loss seen by the op. A further 11% drop would wipe out the value of his holding. These are illustrative figures, I have no details on this fund.