Over the last three years, smaller companies funds have performed well. For example, the Japanese Smaller Companies sector has made an average of 8.5%, against a backdrop of global economic uncertainty. But the top performing fund – Henderson Horizon Japanese Smaller Companies – has made a massive 51% over the same period. If you had chosen the lowest fund in the top 10, you would still have returned nearly 13% in a period of significant volatility.

In the current economic climate, smaller companies are being seen as an integral part of the recovery process, and Asia as a region is expected to spearhead the global turnaround. The International Monetary Fund (IMF) has been clear that the “policymakers in Asia face a delicate balancing act” to maintain its performance and bolster growth, not least in the face of natural disasters such as the earthquake and tsunami in Japan in March 2011, and the recent widespread flooding in Thailand.

Although growth has “moderated” in the third quarter of 2011, as external demand has weakened according to the IMF, domestic demand for goods and services continues to grow. The IMF stated: “Domestic demand is still resilient, and it should continue to sustain activity across the region, contributing to relatively robust growth of 6.3 percent in 2011 and 6.7 percent in 2012 on average, slightly below our forecast last April.”

The rebuilding projects that are getting underway in Japan are expected to continue to push up domestic demand, and growth is expected to reach 2.3% next year according to IMF figures. In addition, an expected moderation in food and energy prices is likely to ease inflationary pressures going forwards. SMEs are set to benefit from the rebuilding process in Japan, with the Shinkin Central Bank establishing a yen 5 billion fund to help with credit lines in December, which is expected to have a 12-year shelf life, but could be extended.

In Asia as a whole, there is a general consensus that smaller companies still provide a good basis for investment returns in the region. Hugh Young, manager, Aberdeen Asian Smaller Companies Investment Trust PLC, identifies that smaller companies tend to be “under-researched” especially in Asia as the amount of research available is relatively thin on the ground. Yet because smaller companies are often fledgling and have greater opportunities for growth, they have the chance to significantly outperform the blue chip companies over the longer term.

However, Mr Young added: “Periods of mispricing and illiquidity mean investors must be patient.” There have been some falls in Asian small cap stocks in recent months thanks to the knock-on effects of the problems in the West, with blue chips offering better returns at some of the most stressful points in the world economic crisis.

But there are still good quality companies in the small cap sector in Asia that bear consideration when looking at longer term investments, especially if the companies you are investing in are key players in their areas of speciality. Mr Young said: “While the region is not immune from the woes of the Western economies its strong fundamentals should mean both large and smaller companies should perform well for those investors with a long-term time horizon.”

The European Union is so convinced that smaller companies will lead the world out of the global economic crisis that it is putting measures in place to improve the international business capabilities of smaller companies that are currently only operating locally within the EU. While this is designed to help the businesses in the eurozone, it is likely to have a benefit for smaller businesses in other key regions, including Asia, that should have an opportunity to improve profitability through strategic partnerships.

Currently just 13% of small to medium sized enterprises in the EU are operating internationally, and the EU is adamant that its “Small Business, Big World” strategy will assist in providing the tools to “penetrate new markets and search for the right local partners”. The concentration of smaller companies in Asia is high, with 99.7% of companies in Thailand alone qualifying as an SME according to the Office of Small and Medium Sized Enterprises Promotion (OSMEP).

So there is plenty of scope for the region’s SMEs to continue to grow and thrive. Even though the floods in the region have prompted market falls in Thailand and Indonesia, the experts in this field are positive about the future prospects for smaller companies. Strong domestic demand and increasing building and rebuilding of infrastructure within the region should provide opportunities for increasing growth for the small cap sector, said SooHai Lim, manager of the Baring ASEAN Frontiers Fund.

The Thai government has also cut corporate taxes to help boost growth in the country – this may be an important reaction to the flooding and its impact on Thailand’s tourist industry, as it should help SMEs become even more profitable.

Mr Lim added: “In an environment where economic growth is at a premium in the world, we have high conviction in the outlook for the South-East Asian economies and markets. In spite of the performance seen in recent years, the weight of the ASEAN countries in the MSCI All Countries World Index remains significantly below the level seen in 1996, a factor which gives us confidence that there is still considerable investment potential from here.”

The prospects do not only look bright in Thailand, Indonesia and Japan though – as China’s moves to devalue its currency to improve export prospects are also going to help SMEs there too. The Chinese economy is growing at such a rate relative to the US that it is expected to surpass America as the world’s biggest economy in around a decade.

President Obama had the audacity to tell China it needed to act like a “grown up” on the world stage, as America is keen to stop China devaluing its currency. But many of the measures America itself is undertaking are designed to devalue the dollar to improve its export prospects and boost its economy, so that could be seen at the very least as hypocrisy.

China is expected to start loosening some of the financial restrictions within the country, which could help to boost interest in its equity markets, and further increase the appeal of its smaller companies.

Investing in property is a desire for many expats no matter where they are, and for many it proves to be a good decision.

Property prices rise and fall in the same way that markets do, the main difference being that once you have bought the property, it is much harder to liquidate your asset if you need to. Aside from that, there is a benefit that you can borrow to invest in property, something you cannot do in most other investment arenas. But this has a downside too if you end up in negative equity.

For now, property prices are relatively static in Asia, or are falling. For example, nearly two thirds of Asian cities are expecting to see falls in their luxury property prices in the coming year, according to the Knight Frank Prime Global Forecast. Prices in Hong Kong and Shanghai grew more slowly in the last 12 months, with respective price rises of 7.8 per cent and 3.8 per cent. This is not bad, but is significantly lower than the 19.7 per cent and 29.7 per cent respectively seen the previous year.

There are fears that China’s property market could fall by as much as 20 per cent next year, if the analysts are to be believed. Of course, just because you live in Asia, there is no reason to think you have to buy property here – the world is your oyster in property investing, but you need to be comfortable about where you are buying your property.

You should also think about how the rest of your portfolio is structured to ensure a property investment would work for you, and decide how long you can afford for your money to be tied up. For investment property, it’s not location location location that matters, but location, quality and price. Some markets are more recession proof than others, like London and New York City, as opposed to Leeds and Florida. This can relate to the ability to get mortgages on property, and strong laws to protect property investors.

In many Asian countries it is not possible to get a mortgage, foreign ownership is not allowed, and property laws – even where they are – are complicated. For those prepared to make an investment and hold on for some time, price falls and a general cooling in the markets at present could offer a buying opportunity. But the real trick is to get the right kind of property, in the right place – location is key, and it is not just a geographical issue.

Choosing the country you would like to invest in is just the start, and you need to get advice from a trusted adviser who has specialist knowledge in the region you are interested in. After that, you need to find the right property, and that can be easier said than done. Those new to property investing often make the mistake of trying to find a property they would like to live in. This is the wrong approach because, after all, you are not going to be living in it. Instead, you need to be looking at a property through the eyes of the person who will rent it from you.

So consider things like transport routes, whether it is close to good schools, or a university if you are after the student market, and how close local amenities are such as shops, bars and restaurants. It may not suit you to be living close to the centre of town, but for many people this is the ideal place to be. Choose your region, choose your target market, then choose the right property.

But before you try to do any of this, choose the right adviser for you, because this is a big decision and you need to get it right.

Take the current economic situation with the eurozone countries desperately trying to get themselves out of the mire, without any of them losing face or seeing an obvious ‘winner’ to come out of this difficult situation.

The horse-trading that we are seeing is tantamount to when Churchill engaged the help of Roosevelt to win the war against Hitler. Hitler, he warned his American counterpart, could not be trusted, and the British and American people had an unbreakable cultural bond. An interesting take on things, since it had only been 165 years since the colonies had broken free from the shackles of British imperialism, and a mere 76 years since the Crown had unsuccessfully tried to influence the outcome of the American Civil War in favour of the Confederacy.

Still, an accord was struck, proving once more the old adage that in geopolitics, there are no permanent allies, only permanent interests. That, frankly, is exactly where we are with the global economic crisis today. Politicians and policymakers are procrastinating – as much out of a dire necessity to save face and their country’s economic future, as uncertainty about what to do next.

In reality, most of the major players need this economic system to work. Of course, 1929 is still sufficiently recent in the collective memory and economic depression benefits very few. Within the EU, the stronger countries need a weaker currency, while the weaker countries need cheaper debt. Both goals will be achieved if the euro is maintained.

Outside of Brussels, the anaemic US recovery cannot afford a meltdown across the pond, bearing in mind that the European economy, while fragmented and culturally diverse, still outstrips that of the US. If the US struggles, China cannot be far behind, and with them the entire South East Asian region, and probably Australia too.

Come to think of it, probably the only countries that would benefit from a Great Depression would be Russia and Iran. Both are well stocked with their own energy supplies, both have low levels of debt, both can feed their own people, and neither are particularly dependent on exports. Yes, Russia supplies much of Europe with natural gas, but the energy business is such that buyers have relatively little bargaining power.

The sight of US Treasury Secretary Geithner checking into a Frankfurt hotel confirmed the view that for now, at least, the United Nations of Finance are as one in ensuring that their industry will not implode. But it still remains a fascinating study in game theory.

Nobody at the table wants anybody else to lose, but nor do they want anyone to obviously win. Throw in the complications of democratic politics and you have every major leader attempting to send messages in code to their electorate that it is they who actually got the best deal, despite what the media might have reported. So we have alliances and deals and axes and detentes breaking out all across the world.

In Europe, the Franco- Germans are trying to get a deal done with the peripheral nations. Here, the stakes are greater scrutiny of sovereign finances in exchange for access to the German national credit card. The bargaining chips are the threat of default from Greece, Ireland, Portugal and others versus the threat of withholding emergency funding to these same nations.

At the next table, the Republicans and Democrats are trying to work out a fair exchange rate between higher taxes on the rich and cuts in entitlements and other spending. Finally, the US and China are seeing if a deal can be done on a stronger Chinese currency in return for continued access to US markets, with Taiwan and North Korea being used as the red herrings. There are still considerable risks. These are all human beings, prone to mistakes. It is very possible that they have miscalculated the severity of the problem and have left it too late to get all the deals done.

It is possible too that the looming elections for many of them – Obama, Merkel, and Sarkozy – will push them towards the political and away from the practical. Finally, it is eminently possible that they are simply not up to the task.

Yet for all the flaws in our global village, it does seem that civilisation is on an upward slope. Contrary to what the media would have us believe, there are less military conflicts than there were 500 years ago, and there is more of an understanding that peace and prosperity are what the people want. Conspiracy theories aside, equilibrium has become the desired economic state for most of the world’s major powers.

Certainly there will be more chapters in this saga. Certainly there will be days when it seems like the world as we know it is going to end and certainly one will find oneself wondering whether or not the men and women in that room understand the consequences. But a solution will be found, it’s in everyone’s permament interest to temporarily ally.

By Jeremy O’Friel

What is yours this year? Lose weight, change something about your life, improve your finances? Well, if it is the latter, you are not alone, as there are many of us who are looking to do that after last year’s topsy-turvey markets.

The thing is, it is vital – no matter what your resolution – to give yourself some goals to achieve along the way, as it will make it easier to stay on track for more than the first month. They need to be smaller to start with, like stepping stones that will help you to reach your ultimate goal, whatever that may be.

Let’s say, for example, that you want to save yourself $1,200 over the coming year. Sounds pretty unmanageable to most of us, so let’s break it down. That means keeping an extra $100 a month of your salary. Yep, still pretty steep, right? Well, hang on though, that actually works out to $25 a week, which is just over $3.50 a day. With a few basic tweaks to your lifestyle, that is manageable.

Of course, if you are looking to get your money working for you and generating more in returns, then you may not want to set a financial goal to achieve in such a short term, as returns can be more difficult to generate and judge on the same month-by-month basis.

Instead, you may want to consider setting yourself a goal of checking how your portfolio is performing every six months, or even three months if you are keen. Ironically, checking this too regularly can cause you to make changes that, ultimately, may make you worse off depending on market conditions.

You may be more sensible to say you want to achieve a set amount in returns over three or five years, and then work towards that over a longer period of time. But you would still need intermediate goals to ensure you get there. This time though, you would need to check that your portfolio is on course to achieve, or hopefully exceed, your expectations over that time. Your adviser should be able to work with you to outline what these intermediate goals might reasonably be.

Resolutions are hard to keep, there is no doubt about it. But if you want to be wealthier this time next year, then you need to put the building blocks in place to achieve it now, and keep working towards them throughout the year, no matter whether you are saving or growing your money. To maximise your returns, you could try to do a bit of both.

First published in Asia Life

While one person will look at the economic data and think the worst, another will look at the same data and interpret it in a completely different way – think of it as the glass half empty, or half full. One will see a disaster, the other an opportunity.

This difference of opinion will ensure that markets continue to thrive, after all, the adage that “two views make a market” is, at a very basic level, what keeps the economic wheels turning. But which one you will be depends on everything from your previous investing experience and understanding of the sector you are investing in, to your current financial and emotional commitments. But it seems we are not spending enough time thinking about how we deal with our finances.

Professor Janet Reibstein, a psychologist who specialises in commitment and relationships, said: “[The Standard Life report] Your Commitments, Your Future shows a discrepancy in how much attention we devote to our financial and emotional commitments. We spend over two hours a day thinking about emotional commitments, but just 37 minutes on our financial commitments.

“People consider financial commitments as something abstract, separate to their emotional life. But our finances underpin our most important relationships and often our ability to achieve our future goals. The Standard Life report makes it clear how vital it is for people to engage with their finances, their personal relationships and future aspirations as one single entity.”

Even if you try, or think you succeed in eliminating emotion from your financial decisions, it is almost impossible to do, especially if you are relying on the money you are investing for a specific reason, such as retirement or paying your child’s school fees. The closer you get to that date, the more important it will be that nothing goes wrong with your investment – so the emotional pressure for it to succeed becomes greater.

There is an inherent part of human nature which makes most of us more comfortable if we are acting along the same lines as many others. This ‘herd’ mentality is not for everyone, there are some very successful contrarian investors who prefer to go their own way. However, this herd mentality is one of the key factors in the creation of investment ‘bubbles’ in the markets.

Often investors want to believe that something is going to happen, and that ‘shared’ optimism is what leads to assets being over valued. For example, in the last 15 years there have been a number of bubbles – the tech bubble in the late 1990s, the property bubble fuelled by sub-prime lending in the States to mention just two – many of which would not necessarily have been seen as bubbles until the markets turned, investor confidence faded rapidly, and prices crashed.

US investment giant Vanguard has characterised its model of a bubble into four stages. In a report earlier this year, it said: “In Stage 1, investors develop initial forecasts of asset prices based on errors in statistical inference, broadly captured under the idea of the representativeness heuristic (where ‘heuristic’ means a decision shortcut).

“In Stage 2, these forecasts of future price appreciation become exaggerated. Overconfidence and excessive extrapolation of recent positive experience come into play.

“In Stage 3, individual forecasts influence the behavior (sic) of the group (in this case, the market or financial system as a whole). Through a process known as group polarization, the financial system takes on higher risk exposures than individual members would separately agree is prudent.

“Finally, in Stage 4, as actual market data begins to undermine the group’s overconfident forecast of the future, the group polarization process plays in reverse, and the collective market outlook shifts sharply to the negative.”

At Vanguard’s stage 2 in the process, the tendency for an improvement in the price of a stock or sector in the short term can be extrapolated farther into the future than perhaps is deserved. This overconfidence is a well-recognised phenomenon in investing, and is aligned with an overconfidence in other areas of our lives.

Vanguard’s report continued: “Overconfidence is perhaps the bestknown bias in behavioral finance. It is found in a wide range of human decisions, financial and nonfinancial. On a number of dimensions, most individuals tend to rate themselves as above-average. For example, most drivers, joke tellers, and students rate themselves as better than average. The tendency to view oneself as above-average extends to professionals, including CEOs, managers in general, doctors, negotiators, investment bankers, and entrepreneurs.

“Overconfidence has been linked at the margin to gender. Men, on average, appear to be more overconfident. For example, they trade more in brokerage accounts—and generate inferior results—compared with women, who are more likely to be buy-and-hold investors.”

However, it is the same herd mentality that causes bubbles to form that pops them so effectively in a short time – when sentiment turns, the majority of investors will look to sell rather than hold, as that appears to be the ‘right’ thing to do.

So, given how many people get ‘burned’ when one of these bubbles eventually bursts, you might wonder why these cycles are repeated time and again, in different markets but with the same painful results? Human nature tends towards being positive, and hopeful. It is also, unfortunately, to try to convince ourselves that ‘it could not happen again’, or ‘it is different this time’.

This bias is what has caused millions of investors throughout history from the South Sea China bubble to the property bubble in the USA in 2007 to make the same mistakes time after time. It comes back to the emotion that we use when we are making all of our decisions, including investment ones. No matter how hard you try, there will still be some emotion in your investment decisions, and that can mean you making a choice more with your heart than your head.

The most successful investors are the ones that have a solid foundation for their reasoning, a clear understanding of why they have chosen their investment and what they expect to get, and the exact point at which they will take profit – no matter what happens. Investing in what you know can help with this decision-making process, and will inevitably give you a better understanding of how a stock or sector is likely to behave. It will also help you to understand the impact of the wider economic environment on your holdings, and help you to be more cool-headed than others.

Feeling in control of your finances is directly linked to your self-esteem, according to a study by Aviva last year in association with a psychologist at the City University in London. Nearly nine in 10 of those surveyed with high self-esteem also felt in control of their finances, while seven in 10 with poor self-esteem felt they had no control of their financial affairs. Taking control of your financial affairs is not only going to be good for your wellbeing now, it will give you peace of mind for the future. If you cannot do this for yourself, then consider getting some assistance from specialist.

For reasons that are largely irrelevant now, countries such as Greece and Ireland have managed to get into extraordinary amounts of debt over the last three years, to such an extent that it is now virtually impossible for them to borrow further with the interest rates that the bond markets are demanding.

A sovereign nation faces the same quandary as a private individual in relation to the accumulation of debt. If you build up too much of it, lenders view you suspiciously and therefore charge you a higher rate of interest on any further debt. This in turn reduces your ability to pay off the debt in the first place, resulting in still higher rates. This is as true for Greece as it is for a college student with their first credit card. For sure, the Greeks have reached this point and beyond, with the yields on 10-year Greek government bonds currently resting at entirely unmanageable levels.

So what options does this leave the government in Athens, and indeed in Brussels at EU headquarters? In times gone past, a country facing this issue would have simply allowed their currency to devalue, effectively placing a discount on all goods and services produced, and wait for the consequent export growth to dig the economy out of its hole. Countries such as Iceland, Israel, Argentina, Russia and many of the South East Asian nations have done this to great effect in the years since 1995.

Of course there are risks involved with the strategy, namely obscenely high interest rates and also the damage that it can do to the nation’s reputation as a sound place to do business. But generally speaking, the strategy works. The problem for the Greeks – and indeed the Irish – is this little experiment that we call the euro.

Two decades ago, the Eurocrats in their wisdom decided that a single currency was a splendid idea that would lead to all manner of competitive advantage and economic growth for the countries that chose to be a part of it. For one thing, smaller nations like Greece and Ireland would have a currency that could be trusted, while France and Germany would be removing much of the currency risk associated with the import and export sector. All things being equal, the euro was to lead to a more stable growth rate for Europe. The naysayers who said that different regions with different economic cycles needed the ability to have different monetary policy were cast as Luddites, and the experiment went ahead. It seems like the Luddites had a point!

Fast forward to 2011 and Greece clearly cannot devalue its current currency, the euro. So how do the heavily indebted countries that we have been talking about pull themselves out of this seemingly intractable recession? This is where it all starts to get a little tragic.

Probably the best thing for Athens and Dublin to do would be to drop out of the euro, reinstate the drachma and punt and devalue those currencies immediately. They would still have political membership of the EU but would now be able to set their own monetary and currency policy. Certainly there would be tough times ahead, but they would be taking the decisive action required to shorten the pain.

Sadly, this is never going to be allowed to happen. The big boys set the rules in the schoolyard. If the Irish and Greeks were to drop out of the euro, and if it led to the gradual disintegration of the single currency, Germany and France would have a whole new problem.

The reinstated Deutsche mark and French franc would soar in value, unburdened by the weaklings of their union, and export growth would be severely hampered. Furthermore, it would allow Ireland and Greece more latitude to insist on some degree of default on their currently unsustainable sovereign debt. This would further anger the bankers of Paris and Frankfurt, who have significant exposure to this debt. Any write down of such assets and the damage to the banks’ balance sheets would further hamper the ability of the French and German economies to grow.

So instead the peripheral EU countries are being forced to take on debt that they can ill-afford, even at the generous rates being peddled by the Troika (the IMF, EU and ECB). There have already been reports out of Dublin that Brian Lenihan, the recently deceased former Minister of Finance, faced the withdrawal of any short-term liquidity provisions if the Irish government refused to take the “bailout”.

Even the word bailout is deeply pejorative, implying as it does that the Europeans were doing their Celtic and Aegean cousins a favour, a helping hand to a brother in need. Quite the opposite. They could easily be seen to be protecting their own positions with regard to the exposure of the debt their banks held. This is the realpolitik.

Greece and Ireland may well be kicked out of the euro in years to come. Never mind that it is going to lead a decade of unemployment, austerity and economic gloom for the smaller member states. One could argue that the federalisation of US monetary and fiscal policy after the Civil War led to the poorer (and defeated) Southern states never being able to catch up, even to this very day.

In any Greek tragedy, the protagonist bumbles his way to personal doom in such an obvious fashion as to draw the audience in and allow them to feel his pain. The bumbling is there for the Greek economy, the empathy…perhaps not.

By Jeremy O’Friel.

The one thing that it can be difficult to do is to keep a regular track of your portfolio yourself.So here are two pieces of online software that we think can help clients to keep a closer eye on their portfolio throughout the year at any time.

Trustnetoffshore.com

Trustnet Offshore has a wealth of data that is available free to investors, everything from mutual funds and insurance funds to exchange traded funds, not to mention worldwide indices, and using its powerful tools you can analyse a wide variety of data in a range of currencies.

Portfolio tool

The key element to Trustnet’s offering is its ‘Manage Your Portfolio’ tool, which not only allows you to create a range of portfolios within the site itself, you can also set up a ‘watchlist’ of funds that you think you would be interested in, and monitor their performance without risking a penny of your own money until you are ready. You can set up email alerts to tell you when certain targets that you have determined have been met.  Getting the funds into the portfolio seems a bit of a fiddle at first, but the system is relatively intuitive, and it is clear to see what funds you are including in the portfolio when you select them. You can hold a maximum of 10 funds in the portfolio.

Other benefits

There are also a variety of educational guides available on the site that will help you learn more about offshore investing, ethical investing and exchange traded funds. You can also compare the performance of various funds you choose without them needing to be in the same sector.

Pros

Lots of data, plenty of information and research to help keep you informed, and easy-to-use tools. Great portfolio tool too.

Cons

Inexperienced investors may find it hard to navigate the site effectively to use the wealth of information to greatest effect, but your adviser can certainly help here. The site is not particularly inviting in its appearance.

Website

www.trustnetoffshore.com

Bloomberg

Bloomberg is one of the world’s biggest financial information companies, and its founder Michael Bloomberg is currently Mayor of New York City. The amount of news, data and statistical information available on this site is vast, probably one of the most sophisticated financial news centres there is. It is backed up by a TV channel and radio station.

Portfolio tool

Bloomberg’s Portfolio Tracker tool allows you to track up to five portfolios each with up to 20 holdings, and you need to provide your purchase information for each holding, before you can look at the financial data for all the holdings you have in your portfolio.

This service also has a ‘watchlist’ but this is for securities you do not hold, but that you would still like to follow. You can follow indices in here too, something you cannot do within your portfolio as an index cannot be bought

Other benefits

Once you have signed up for your free registration to the Portfolio Tracker, you are presented with a fairly dull looking page, but this does have all of the information you need to start to create your portfolios.

If you are still unsure what to do, the ‘help’ facility provides a much clearer breakdown of what you should do to create your portfolio. Once you have entered the shares you own and stated when you bought them,w save the changes and you will be presented with a screen with not only the data relating to the shares themselves, but also related news, and access to specific performance data you can view over a variety of timeframes.

Its Market Monitor also provides real-time updates on your portfolio’s performance too.

Pros

You would struggle to find more data anywhere than Bloomberg, and the information you get from the Portfolio Tracker is incredibly comprehensive.

Cons

If you do not know the exact name of the shares you want to follow, or that you hold in your portfolio, it is very difficult to get the system to work. Also, you can only include shares in the portfolio rather than funds, so not especially useful for mutual fund investors, although very good for those directly holding shares or wanting to follow the performance of shares or indices.

Website

www.bloomberg.com

But investing in commodities – whether directly if you have the means and the knowledge, or more likely through commodities funds – can be a good way of trying to insulate your portfolio from the ups and downs of the markets.

Frances Hudson, global thematic strategist at Standard Life Investments, said: “Investors need to pay attention to the information that can be gained from commodity markets, even if not investing directly.

“It is difficult to generalise across the asset class because there are distinct groupings in commodities - precious metals, industrial metals, energy and agricultural commodities – which move in different directions for different reasons.

“The physical commodity markets for industrial metals, for example, can provide information about the state of the global economy. Gold prices are based more on sentiment, representing a safe-haven against uncertain equity markets, political risk or US dollar weakness. There are also influences affecting individual commodities. If individual commodity markets are trading together it should flag that the asset class is not trading wholly on fundamentals. This could be because sentiment and speculative influences are dominant.”

Commodities traditionally do well when there is uncertainty around other types of stocks and shares, quite simply because they are the ‘building blocks’ of so many essential goods and services that no matter what is happening in the world, there is still a need for them to be traded. This is why they can provide a good ‘hedge’ against other stocks or sectors falling out of favour. It can also insulate your wallet from uncomfortable consumer spending increases.

For example, having an exposure to oil prices through a fund will allow you to benefit from rises in the oil price within your portfolio, even though you will have to pay more at the pump to fill up your car. The effect is to negate, either completely or to some extent, the downside of the rise in prices.

The price of commodities will change according to a variety of factors, including the time of year and the demand for a particular commodity, like oil and gas prices rising in the winter, and political machinations will also have an effect on price.

Since commodity prices themselves are very volatile, it may be worth considering investing in the means by which the commodities are produced, such as “investing in fertiliser or irrigation rather than agricultural commodities, or investing in geophysical surveys or oil services or even in the companies that make the huge tyres used for mining trucks”, said Ms Hudson. This harks back to the adage that the people who made the most money in the California Gold Rush were the people who sold the shovels – it seems little has changed in nearly 200 years.

Gold still remains the one commodity that investors flock to when things are getting rough in the markets. The precious metal is seen as a ‘safe haven’ from financial storms, a feature that is clear if you look at gold price charts over the last five years.

The price surged in 2008 as investors sought refuge from the financial storm breaking out during the credit crisis, and the continued uncertainty about world markets has resulted in a continued rise in the gold price to date, albeit with a few dips along the way. It was trading at $1,537 per Troy ounce at the time of writing.

You do not have to buy bullion to get exposure to gold, but if you want to you could use a service from www.bullionvault.com, which will buy and store your gold for you. If you prefer not to hold physical gold, there are many other ways to get exposure to this commodity. One of the most popular is to buy an exchange traded fund (ETF) that tracks the gold price, which provides a very low cost means of investing.

Another alternative is to get exposure through commodity funds. The top performing funds over the last five years have been gold funds, according to data from Trustnet Offshore, with Falcon Gold Equity rising by more than 117% since 2006. This is followed closely by Baker Steel Genus Dynamic Gold, which has risen by 111.59% over the same period.

However, as if to prove how fickle these commodity markets can be, the best performing fund over three years is the ETF Securities Physical Silver fund, which has risen by 111.45% since 2008 – the year the credit crunch started. If you are looking over one year, then the top performer is perhaps surprisingly the ETF Securities Leveraged Cotton fund, which has risen by a massive 242.5% since this time last year. Droughts in Asia last year meant that the cotton harvest was much lower than normal, and since the price of any commodity – or any share for that matter – is driven by supply and demand, the price has gone up dramatically.

With any investment, it is important to keep an eye on what is happening not only in the market, but also in the wider world and what effect this could have on the investment you are holding. For example, this year, the suggestion is that there will not be a shortage of cotton, so prices in these funds are likely to fall back as supply and demand even themselves out.

It is this monitoring of trends in the marketplace that provides the best estimate of what will be the commodity or sector that is likely to see its price rise the most in the coming year. Take the inclement weather we have seen across the world in the past six months, with severe storms and flooding in Australia, and tornados recently in the US which have flattened towns in their wake.

Australia’s misfortune has already seen sugar prices reach a 30-year high, as crops were destroyed in north Queensland by Cyclone Yasi, which according to Bloomberg had wiped out at least US$507m worth of production.

Wheat on the other hand has seen its price fall after Russia announced that it will be lifting its export ban from July 1, 2011. The ban was implemented in August 2010 when Russia suffered its worst drought for 50 years. Again, it comes back to supply and demand and its influence on price.

Emerging market economies, such as China and India, have a big impact on commodity prices because of their high consumption of building materials. The widespread rebuilding programmes in Japan to aid its recovery from the tsunami are also likely to increase demand for specific commodities, such as metals, in the region.

Yet the sharp falls in commodity prices in recent weeks suggest that “a lot of speculative-demand forces are weakening”, said John Greenwood, chief economist at Investec.

He added: “I think that commodity prices have been led by a lot of speculative investment. The key to that is what emerging economies do. They have been raising their rates and tightening monetary policies, which they need to do because monetary and credit growth in those economies has been much stronger. If they can get things under control so that they are not boosting the prices of these speculative assets, overall commodity prices will stabilise and may even come down some.”

The country’s stunning landscapes can be accessed more readily in some areas by bike, and you know you are getting the additional benefit of aerobic exercise in the process. The health benefits of cycling are myriad, and studies have shown that those people who cycle to work, for example, have a 39% lower rate of all causes of mortality than those who do not make cycling a regular part of their day.  It also helps to reduce the incidence of heart disease and cancer, and cycling 30 mins a day will have the same health benefits as doing three aerobic classes in a week.

But cycling, no matter where you are, is much more fun if you can find friends or a club that you can cycle with, and this is something that is  starting to come to the fore in Cambodia. Being an expat in an unusual country can sometimes be intimidating, and making new friends who are not your work colleagues can pose a problem. But the internet is an ideal way to make contact with like-minded active people.

Cycling is one of the best ways of staying fit and holds no boundaries to age, so it is ideal for individuals  or the whole family. One of the cycling hubs of Cambodia is The Vicious Cycle shop in Phnom Penh, and after meeting on a Saturday morning at the shop – which was also the first bike shop in Cambodia – you will set off in groups who are riding at a similar level.

Adam Platt-Hepworth of The Vicious Cycle, said: “Until recently, the only bikes you could buy were crummy second hand bikes at Orusey Market, or you had to get them from Thailand or Singapore. This has changed greatly since we opened the first bike shop in Cambodia, The Vicious Cycle.

There are now two other well stocked bike shops with a range of brands and bikes to suit all budgets. Bikes in Cambodia are now comparably priced to the retail prices in Singapore or Thailand.” The Kung Heng, or Giant Shop, sells Giant bikes ranging in price from $250 to $3,000, while Flying Bikes 2, which was set up by expat Pierre-Yves Catry, sells Cannondale and GT bikes, so there is now something to suit all riders, whether they  are mountain bikers or roadies.

The Vicious Cycle will rent you a  bike, and it also runs tours around the country, whether you are interested  in a short day trip or just a  couple of hours in the saddle, right  through to tours lasting more than  a week at a time. It rents and sells new and used Merida, Trek and Giant bikes, plus the all important maps of Cambodia which are essential if you are setting off on your own.

However, Adam suggests going out for the first few rides you do with an experienced group before going it alone. Adam said: “It helps to get some initiation into the logistics of riding and navigating the Cambodian countryside. Also, you are likely to meet some others who would gladly join you on any longer rides you may have in mind.

“There is an increasing range of social groups that one can join around Phnom Penh. The Easy Riders ride every Saturday from an alternating location. This is an immensely popular ride with long term and short term expats alike. It’s an easy going, achievable ride where you can meet some interesting people. They are usually back into town in the early afternoon. You can ask to be added to the list by emailing Into Goudsmit on: into.goudsmit@undp.org.

Sabay group rides most Sundays. They have mainly easy going group rides around the countryside. Also recently established is the Bike Hash. The contact for this is chris@symbiosistravel.com.”

Pierre is running Sabay Cycling, which is designed for leisure rides on mountain bikes. He said: “The objective of this club is to organize easy rides for every skill / fitness level. Most of those rides take three to four hours with many drink stops.  Distances vary between 30km and 50km. We normally have our club rides every two weeks, on Sundays.

“This year, we also plan to have three leisure rides in various provinces such as Kampot, Kratie or Koh Kong. The club provides transport to the riding place, whenever required. Membership is free for Flying Bikes Shop customers, and you can get in touch at flyingbicycles@online.com.kh.

“However, for those who want to ride/train in the week, there is a group riding every morning. They meet at the Independence Monument around 5:15 am and ride on the road for 25 km before going to work. With the cooler weather and lighter traffic, this is the ideal time for cycling.”

Avoiding the National Highways is advisable if you want to have a nice ride away from all the traffic, but being off the beaten track can be a problem if you are not familiar with the routes. You can either get a map – Adam recommends Gecko’s Map which shows lots of back roads – or you can go hi-tech and get a Garmin with downloaded maps, which can make your cycling life more enjoyable by reducing the need to stop and check where you are.  Adam recommends getting a Garmin from Aruna Technologies, opposite the Himawaro Hotel in Phnom Penh if you want to one, and the website is www.arunatechnology.com.

He added: “Once you have a GPS, you can also visit virgintrails.com to download GPS tracks from other riders.  This is a lot of fun and can take you to the back of beyond and back safely.”

If you want to get a bit more serious, then you can get yourself involved in some racing. The annual Angkor War Marathon has a bike race the day before the run, which has become increasingly popular.  Pierre has been organising mountain bike races since 2005, when less than 50 riders took part. Now up to 150 riders enter the Championship.

He added: “For competitive cyclists, we have our Cambodia MTB 2011 Series, with five rounds held in different tracks: Phnom Baset,  Kep, Silk Island, Kirirom and Final in  Phnom Baset.”  Round three will be on July 3, and participants can choose from six categories:  Expert, Junior, Intermediate, Novice, Veterans, Women. (contact: flyingbicycles@online.com.kh)

Pierre added: “I am confident mountain biking will keep growing in Cambodia, as it has many advantages: fun, healthy, affordable. It can be practiced by the whole family, and it is the best way to appreciate the Cambodian countryside as it gives access to beautiful places which cannot be reached by car.”

Best rides

Adam suggested the following are  the best rides in Cambodia, in no  particular order:

The Mekong Islands nearby Phnom Penh

The ride to Oudong Mountain Kirrirom National Park for some  good off-road riding

The Cardamons Chi Phat  Eco-Tourism zone

Phnom Penh to Sihanoukville via  Kep & Kampot (over 4 days)

Phnom Penh to Siem Reap via Oudong and Kampong Chanang

The Mekong corridor stretching from Stung Treng down through  Kratie and Kampong Cham

Source: The Vicious Cycle

Contacts:  Grasshopper Tours – run by Adam, who is also behind Vicious Cycle www.grasshopperadventures.com

Pepy Tours run rides occasionally  http://pepytours.com/tours/pepy-ride-v

Soksabike in Battambang offers  cultural bike tours of the area  www.soksabike.com/about-the-tour

As part of its expansion, Infinity’s managing director Trevor Keidan has become chief executive of Infinity Financial Solutions Ltd (Hong Kong) and is relocating to the city to live with his family.

He said: “Relocating to Hong Kong is going to be a great experience. It is so vibrant and energetic, and taking the company into the next phase of expansion in Asia is also very exciting for us all.”

There are more than seven million people living in Hong Kong alone, many working within corporate businesses within the four key industries within its economy; financial services, tourism, trading and logistics and producer and professional services.

Trevor said: “The biggest thing I have noticed about Hong Kong so far is the pace of life and the way people are in the city. It is a very fast paced environment and feels like the Manhattan of Asia, things happen quickly and decisions are made in a short space of time.”

Setting up a company in Hong Kong is just the start of providing financial advice here. Infinity has also joined the Hong Kong Confederation of Insurance Brokers (HKCIB) which is a self-regulated body for insurance brokers working in Hong Kong. As part of the membership requirements all staff providing financial advice have to have obtained the necessary industry qualifications.

The HKCIB prides itself on the professional standards of those brokers working under its auspices, and the companies under the umbrella of the HKCIB are working to the highest level of professional conduct. Companies must be vetted before being accepted by the HKCIB, meaning clients can take comfort from knowing advisors are working to this level.

Trevor said: “We operate to the highest professional standards across all of our offices, no matter where they are in Asia; this is something that we as a company are very proud of. So to be able to qualify for membership from the HKCIB through its vetting process is a real seal of approval for Infinity.”

As part of the expansion, Infinity is looking for new staff for its Hong Kong office. Trevor said: “We are looking for the highest calibre people, and we will not settle for anything less. We are not going to employ people who are simply going to do the same job at Infinity as they are doing with our competitors. We are looking for people who will embrace our ethos and fit into our corporate culture.”

Infinity has redesigned its website to coincide with the launch of its office in Hong Kong, and Trevor believes the new clarity that the site has “gives a real reflection of how we like to deal with clients and do business”.

He added: “Infinity as a company is going from strength to strength, and expanding into Hong Kong solidifies our position at the forefront of our industry. It is a clear indication of all of the hard work that the Infinity family does for its clients, and we hope to continue to grow organically – that is our preference – and help even more expats and nationals in the region.”

The thing is, if you think pensions are boring, how interesting do you think a retirement in penury is going to be? Harsh, I know, but this is the reality. The sooner you think about your pension, the easier it is to get what you want.

Ideally, you need to think of your retirement planning in two parts: what you need to do to save while you are working, and what you need to do to generate an income once you retire.

How you save for your retirement to maximise the tax benefits available to you will depend largely on where you live and where you are considered to be domiciled, and even who you work for. Expats are in an interesting position as they may be able to benefit from a tax-free income, but could be excluded from a ‘traditional’ style pension because of the jurisdiction they live in. But some international companies have schemes set up that are designed to help different nationals get the best from their contributions.

If this is not an option, an offshore pension is essentially a long-term regular premium savings plan which usually has an element of life cover included. There is no specific tax rebate available on these like there would be in a ‘home’ pension plan for many people, but if you are living in a regime where you are paid a tax-free income, you are effectively getting the same benefit in any case.

People get very het up about how complicated pensions are, and to be fair I can see why. But if you remember that in its simplest form, a pension is a regular savings plan it becomes a lot clearer. Yes, there are lots of other bells and whistles available, but remember that if you find the issue confusing.

You do not have to use a pension to save for your retirement, far from it. You can use any number of investment plans or property investments. In fact, many people will build a property portfolio specifically to generate an income from rent when they retire, which is a perfectly legitimate way to pay for your twilight years.

Yet for most people, a pension will provide the discipline they need to save for such a long time into the future. Remember too, the chances are you already will have a number of pensions you paid into with previous employers. When you come to retire, you need to ensure you get all the money due to you.

If some of your pensions were built up in the UK, even if you are not British, then using a Qualifying Registered Overseas Pension Scheme (QROPS) makes sense. You would transfer your pension into a QROPS, which allows you to take your income without it being subject to UK tax. This would give you a major benefit in retirement, but you can also borrow against your QROP in certain circumstances.

The important thing is to get advice as soon as you can about your pension planning, because if you leave it too long, it will be a lot harder to get the results you want.

First published in Asia Life

It is hard to keep up with all of the areas of our finances that we need to, especially when there are so many more calls on our time – working, networking, spending time quality time with your family whenever you can. There are so many things that provide much more joy than poring over paperwork and, ultimately, paying out money for things that you may not see any benefit from for years – if ever.

That is why I thought it would be worth putting together a brief outline of the areas that you should be considering more regularly than you might ever imagine, to keep you up-to-date with your financial housekeeping.

One of the key items that people all too frequently deal with and then forget about is their will. There are many people who never even get around to making a will, but those who do still often leave it for such long periods of time that when the time comes and it is finally needed, it is woefully out of date, and can cause more problems than it solves.

For example, let’s say you were married, but got divorced. You may have had two children with your first spouse, and some years later remarried and had another child with your new spouse. Well, if you had not updated your will in the intervening years, there is a chance that not only would your first family inherit everything, but that your latest child may be excluded as a beneficiary.

You should revisit your will every time something significant changes in your life. Divorce, remarriage and having children are the more obvious events, but you should also check your will if you sell your home, or you relocate from one country to another. If you have assets in more than one country, you may also need to write a local will to cover the assets within that country, to prevent your estate falling foul of cross-border rules.

If you have put any of your assets in trust – which can be a useful way of mitigating inheritance tax on your estate – then you should also make sure that any letters of wishes are current. These will impact on the way that the trustees will deal with the assets in the trust at a trigger point, which could, perhaps, be when a child reaches 18 or 21, or when you die.

In a similar vein, you should also make a point of double checking who is going to benefit from your life insurance – have you changed the details from your ex-spouse who you now cannot bear to be in the room with? Will all of your family be taken care of in the way that you hope?

Many company pension policies will also have some kind of death in service benefits, or you may have another form of life insurance through your employer, and you must also make sure that not only will the right person get the benefit if you die, but that the company can always get in touch with you, even if you simply move home. The employer should also have current contact details for your beneficiaries and next of kin, because these people may not have been posted abroad with you.

You should also think about whether you have all of the protection you need. For example, what if you could not work, do you have income protection that would pay your bills while you are recovering? Or, think about what would happen if you had a severe illness and what impact that would have on your family. Critical illness cover would give you – and them – a lump sum to help cope while you get yourself back on your feet.

However, all of these measures will be largely irrelevant if your nearest and dearest have no clue where to find all of the relevant paperwork for your accounts, pensions and assets. If you are no longer here, your partner will need to know where to go for these vital documents – it can mean the difference between allowing your family to maintain their standard of living, or plunge them into a greater depth of turmoil than they already will be. It would be wise to make a list with details of all policies, accounts, wills, trusts, and so on, stating where the documents are and who to contact in the event of something happening. You should also make sure your spouse or dependents have a copy and understand it. You should review this document once a year.

None of us likes to think about our own mortality, but death is a fact of life, no matter how unpalatable. If you have not thought about your financial affairs for at least a year, then do it now, and make sure all of the protection you have in place for your loved ones will help them when the time comes.

First published in Expatriate Lifestyle

I did some research on the place, Phu Quoc, the largest island in Vietnam, lying just off of the Cambodian mainland in the Gulf of Thailand. Near enough to Bangkok for a weekend escape, yet the difficulties of getting there, supposedly high prices, and somewhat lack of facilities did not make me overly enthralled.

The island kept popping up in conversation over the next few years, a traveller here or there would tell me about this slice of tropical magic they had come across, or about this place in Vietnam that was such a departure from the usually loud, overpopulated, and chaotic scenes one finds in many spots in the country.

Transport to Phu Quoc was now easy, and guesthouses and resorts offering competitive prices had sprung up. Yet it wasn’t until recently, when I had four free days with nothing to do and a visa run from Bangkok beckoning, that I finally made it to the place that has travel agents buzzing, giving it the moniker “Pearl of the Gulf.” Phu Quoc, despite being a sleepy backwater, has had a rather colourful history.

The island was occupied in the late 1800s by the French, who created coconut and rubber plantations around the small fishing villages. Following a brief period of independence after WWII, Phu Quoc was taken over by the Americans, who housed 40,000 prisoners at the Coconut Tree Prison, which still serves as the island’s “lockup” today.

In 1975, the Khmer Rouge took over the island, but were soon overrun by the Vietnamese, and Phu Quoc became a major military base for the ensuing Cambodian- Vietnamese War, and it was not until the 1990s that Phu Quoc transitioned from garrison to potential tourist hotspot. These days, Phu Quoc eagerly welcomes tourists to its sandy shores, and in fact an international airport is in progress, with a lot of resort development projects on the way.

This has lead to fears that the island will be transformed into another overcrowded venue like its Andaman Pearl sister, Phuket, has been. But for now, Phu Quoc remains a fascinating place for an escape. Not only does it have some beautiful white sand beaches, it also is home to a bustling local port town with a colourful market, a jungle interior to explore, and some excellent seafood. It’s also one of those rare island paradises where locals are mostly too busy engaging in the booming pepper farm and fish sauce industries to be bothered fleecing tourists, and the isle retains this exceptionally sweet and simple welcoming feel to it, and after a few days, one feels like staying much much longer.

The main town on Phu Quoc, Duong Dong, is built around the river of the same name, where dozens of laden fishing boats set off from each evening for trips into the nearby sea. The town is small enough to explore on foot, and comprised of its busy market, along with a collection of pleasant enough cafes to sit idly in and watch the world go by, savoring the sweet and ultra-strong Vietnamese coffee, which takes 15 minutes just to filter down from its drip cup.

There are also lots of simple streetside eateries throughout town, offering Vietnamese staples such as bun cha (vermicelli noodles and grilled pork served in soup) or bun bo Hue (beef noodle) soup, where friendly locals will pantomime one through the correct eating techniques and bring out their children to shake hands with the foreigner.

Interestingly enough, Phu Quoc is one of the few places in Vietnam where I did not get taken to the cleaners on a daily basis when it came to settling the bill. Some of the highlights of Phu Quoc are either in Duong Dong or just a short motorbike ride out of town. The island is renowned for its fish sauce and fish paste, and throughout the countryside one comes across women in their conical hats laying out huge straw baskets of tiny anchovies to dry.

Back in town, one can drop in at the local fish sauce factory, where free tours are offered, taking visitors into a chamber that slightly resembles a wine cellar, where huge wooden vats of the fermented delicacy sit waiting to come to age. Just like a vineyard, tasting is part of the tour, and surprisingly, the small sips we were given straight out of the vats were actually a lot more palatable than I ever would have imagined.

Another large industry on Phu Quoc is pepper, and throughout the island one comes across pepper plant farms, with large sheets of green and black peppercorns laid out to dry in the sun. Pepper is the most widely traded spice in the world, and Vietnam is the world’s largest exporter, controlling around a third of the market. Exploring Phu Quoc’s jungle interior is yet another option, but your average visitor is here for one reason alone, to laze on the island’s gorgeous white sand beaches. Nearest to Duong Dong, Truong or Long Beach is a strip of sand that runs almost 10km.

The northern end is packed with resorts, which peter out into some quiet patches of sand as one wanders further south. The odd fruit vendor wanders the beach, and there are some operations offering beach umbrellas and cold beer, but otherwise the modus operandi is slow. The best beach on the island, and possibly one of the top three in Asia, is sleepy Bai Sao Beach, some 30km south of Duong Dong.

White powdery sand, crystal clear turquoise water, and a beckoning sandbar are just a few of the reasons to linger long at this gem. Several resorts have sprung up, and this is one paradise that is unlikely to remain a secret for much longer.

Better to get your Phu Quoc pearl now, while it is still fresh. There are several daily flights from Ho Chi Minh to Phu Quoc on Vietnam Airlines, tickets can be booked online from overseas. Hydrofoils also run from Rach Gia or Ha Tien in the Mekong Delta, taking a few hours to reach the island.

Accommodations: Part of the MGallery Boutique Collection, La Veranda is a colonial style resort set on a beautiful spot on Long Beach with a good restaurant and staff that can speak English. www. mgallery.com. There are an abundance of good guesthouses ranging from $20 and up along Long Beach, but do not show up during Vietnamese holiday periods without a reservation, as the island has become very popular destination among the middle class in Ho Chi Minh.

The unflatteringly named PIGS economies – Portugal, Ireland, Greece and Spain, although Italy can also be added to this list – have been central to the financial dramas being played out across the globe. The Greek debt crisis entered its latest phase this month as the country confirmed it would not meet its deficit reduction targets, one of the conditions under which its bailout by the EU was agreed. It means there is more uncertainty about exactly what will happen in the Eurozone, and that is causing a ripple effect of financial jitters much further afield.

The confidence of investors has suffered knock after knock this year. Iceland was the first economy to fail, but since it is not part of the Eurozone, it found itself alone in dealing with it. In the Eurozone, first there was the Greek bailout, followed soon after by the collapse of the Irish economy, followed by Portugal, meaning three countries have had to get cash handouts from the European Central Bank.

But it is not just Europe that is struggling with ‘sovereign debt’. The USA was literally on the brink of not being able to pay its bills until an 11^th hour deal was agreed between the Republicans and President Obama. Without this deal, the world’s biggest economy would have failed, and that outcome would have been unthinkable.

Yet there are areas of the world that are struggling less. Asia, while not immune to the financial problems being seen elsewhere in the world, is one of these areas. The key markets in Europe, America and the UK have fallen dramatically, but while Asian markets have fallen, their falls have been less marked than those elsewhere in the world – so far. China and Japan still have trade surpluses, along with Germany. But while the German government has agreed to another, bigger bailout for Greece, it is looking increasingly unlikely that it will buy much more breathing space for the Eurozone as a whole. The single currency is in grave danger of disappearing in the longer term, as it stands, and the West, at least, is on the brink of a double-dip recession.

If this is played out, there would inevitably be problems for investors in Asia who, either directly or indirectly, are exposed to these markets. Of course, the obvious question is to ask what you can do to protect yourself in the face of such a downturn.

Well, the first thing to remember is not to panic. Even of your portfolio makes losses on paper, you will not actually have lost anything until you cash in your investments. Making a knee-jerk reaction to market news is not wise at any time, and as things stand it is sensible to take some time to think before taking any action.

It is at times like this that you should be speaking to your adviser on a regular basis to get the latest information about the markets, what he or she expects to happen, and what you should be doing in the meantime. They should be keeping a close eye on what is happening around the world, and they will have a better idea of how your portfolio is put together and what you should expect it to do. They are, after all, the experts in their field.

But the important thing to remember is to keep in touch with them, no matter what. You need to be able to sleep at night when you think about your investments, and if you need to protect yourself from the markets because you are nearing a date such as retirement or the time you need to pay a child’s school fees, then the nature of your portfolio and the risk you are taking should already be changing.

With the markets swinging around as wildly as they are, you may even be advised to increase your investments in certain areas, if appropriate to your circumstances. If that is the case, then please don’t think your adviser needs to sit down in a dark room with a cold towel around their head. Some stocks and shares are not massively affected by downturns – think of the things that need to be consumed even if things are going wrong in the markets, such as utilities and pharmaceuticals. These are things that people cannot do without and are consequently less reliant on buoyant economies, so can provide some shelter in difficult times.

If their stock prices have also been tainted by a general downturn, it may also present a buying opportunity. However, unless you are an expert, take advice on the best course of action. For now, it may simply be to stand still and wait for the dust to settle.

First published in Expatriate Lifestyle

But things are starting to change as the sector becomes more mainstream, and the performance of ethical funds is now competing with more traditional, non-ethical sectors. Alison Steed looks at exactly what ethical investing is.

What is an ethical fund?

An ethical fund is one that has very specific criteria that it applies to companies that it chooses to invest in, which relate to the way the fund itself has been set up, and its principles. For example, some funds will avoid any companies that make weapons, or those that deal with alcohol production, or pornography, or who have a gambling slant to their business.

If you have a particular area that you would like to avoid yourself, you would need to decide on what your principal concern is, and identify a fund with your adviser that will meet your ethics.

Do all ethical funds exclude companies based on what they do?

Well, not exactly. The funds themselves work in two ways – they will either exclude companies specifically because of the nature of their business, or they will seek to actively include them because of what they do.

It may be, for example, that a fund would include a company dealing with nuclear energy in preference to a company that deals with energy production using fossil fuels because it has a lower impact on global warming because there is less CO2 produced.

The screening process for funds is very stringent, and a set of principles will be established when the fund is set up. Often there will be a board of researchers in addition to the fund manager who will monitor companies to see how they are doing business, to ensure that those they are already invested in continue to meet the fund’s criteria. In addition, they will identify companies that the fund manager can invest in, which are ‘screened’ according to the fund’s ethical stance.

Is this the same as socially-responsible investing?

Yes, the terms ‘ethical investing’ and ‘socially-responsible investing’ are both interchangeable.

What about ‘green’ investing?

Green investing relates specifically to companies dealing with environmental factors, such as renewable energy, or reforestation. These funds actively seek to invest in companies that are going to be working towards helping the environment through their business.

Again, specific criteria will be laid down for each ‘green’ fund which dictates how the investments can be made. Some will include firms, and some will exclude them – you need to check how companies are chosen to be sure your own ethical stance matches that of the fund.

I have heard about ‘dark green’ and ‘light green’ funds – what is the difference?

Dark green funds are much stricter in the way that they apply their criteria. These funds will generally look to exclude companies that operate in a field that is working to the detriment of the environment. Light green funds are prepared to take what is called a ‘best of sector’ approach.

For example, you would expect oil stocks – the likes of BP, Shell and ExxonMobil – to be excluded from a fund that is concerned with the environment because of their involvement in the use of fossil fuels.

However, light green funds using a best of sector approach will include companies that are considered to be the best of a bad bunch – so if BP was considered more environmentally friendly than Shell, or vice versa, it could be held in a light green fund.

Isn’t that just blurring the lines?

No, not really. The criteria for all of these funds are set out clearly, and if you do not think this is the right way to operate, you should choose a different fund that meets your personal ethics.

The one good thing about including companies in these funds when they may otherwise not get a look in is that the fund manager and investors can start to engage with these companies to improve their environmental measures more quickly, and more effectively. It is a way of getting firms to perform better and more ethically, and it can be extremely useful.

OK, so what is ‘sustainability’?

This is just as it sounds – sustainable investing done through ethical funds is designed to help companies to continue to help the environment, by putting money towards goals which might include renewable energy, such as hydropower or wind farms.

Can I expect to get decent returns in this sector?

Not all the time, but then what sector is there that you can expect great returns all the time? When the first ethical funds were created they were given the derisory name of ‘Brazil funds’ because ‘you would have to be nuts to invest in them’.

Now, there have been periods – especially in turbulent times, as it happens – when ethical funds can come into their own.

Recent figures from Trustnet Offshore show that the top three funds in the offshore ethical equity sector – Premier New Earth Solutions Recycling Facilities, AMB Ethical Trust and Banco Kultur – have made 14.2%, 12.3% and 12.3% returns respectively in the past year. The MSCI World Index, by comparison, has fallen by 1.51% over the past year at the time of writing.

Should I have a big part of my portfolio invested in ethical funds?

From a performance point of view, you would be banking a lot on one area of investment to work in your favour, and the best advice is generally to diversify your holdings to try to insulate yourself from falls in different sectors at various times.

However, if you have a strict stance on certain areas, for example if you would not be happy to invest in a company producing alcohol, then you would need to consider avoiding this as a priority within your investment portfolio.

What is being done about ethical investing in Asia?

Plenty. The Association for Sustainable and Responsible Investing in Asia (ASrIA) had its 10th annual conference in Hong Kong at the end of September, which brought together a wide range of ethical investing experts to look at how the Asian markets are approaching sustainability and ethical financing across Asia.

The Singapore Stock Exchange has also implemented a Sustainability Reporting Guide for all of the companies listed on the exchange. They must report on their environmental and social risks as well as their financial performance.

Given the natural disasters that have hit Asia and the Far East in recent years, there is a real sense of concern about climate change and environmental risks.

How can I find out more?

You can look at the ASrIA website at www.asria.org, and/or you can speak to your financial adviser for assistance in working out whether an ethical investment strategy would work for you.

But finding the best way to do this is not easy, especially if you loath the idea of being incarcerated in a gym with around 20 other people, yet want the camaraderie that this environment can provide.

Step forward the modern-day boot camp. The traditional boot camp style of fitness regime conjures up images of a drill sergeant shouting instructions from the end of your nose. But times have changed, and while you can expect to be worked hard by the instructors, the regimes are designed to be as much about social fitness as they are body sculpting.

Nowadays you are likely to meet at 6.30am for an hour fitness session before venturing into the office. The health benefits of exercising at this time of the day will leave you feeling vibrant and ready for the day ahead. Businesses are latching onto this concept, and many are also encouraging group fitness sessions.

Darren Blakeley, general manager of UFIT, one of the main companies to provide boot camp training sessions in Asia, said: “We are definitely not like that at all. It is not the way I wanted to go with our style of boot camp.

“I just think the environment we have here is more conducive to a facilitative style of training. In our case, our training is always done outside. The only thing that stops us training is lightening and monsoon rains.”

Boot camp classes, which include lots of bodyweight training moves, such as press ups, squat jumps, tricep dips and the use of resistance bands – which are tough rubber bands that you can use to train your upper body, abs and legs by tying them to an inanimate object, or by simply standing on them – have become enormously popular.

This is largely down to the quick improvements that people can see in their body shape, and because they can train before and after work with like-minded people, which helps to ‘share the pain’.

Dan Remon, chief executive of Fitcorp Asia, which set up the first boot camp fitness regime in Asia back in 2002, said: “Our typical client is a very successful, motivated individual, who tend to surround themselves with like-minded people. Their time is scarce, so they look to get time efficient and effective workouts to manage the balance of exercise and their stressful lifestyles.”

However, you need to do your research to make sure you are getting a good workout with instructors who are qualified and know what you are doing. There are many new companies popping up in Asia all the time, so make sure you know what you are getting for your money. You can expect to pay around Baht3,900 for a block of 24 sessions that you can use as and when throughout the year with Fitcorp Asia, and Singapore $250 for 10 sessions with UFIT, but check the terms and conditions of any company you sign up with before you pay anything.

Remember it’s your body that will be taking the pounding, so make sure you know the person giving the instruction has the pedigree and certificates to back up their claims. A reputable instructor will go through a head to toe assessment and often a movement limit test as standard before your first workout. You should also, of course, check with your doctor before starting any strenuous exercise regime. You should also, of course, check with your doctor before starting anystrenuous exercise regime.

Hong Kong already has a well established number of boot camps, with Bootcamp Ltd providing around 30 classes a week all around Hong Kong island, and they are expanding into Kowloon. Single sessions cost HK$200, or you can buy three or six months’ worth of classes, and get a 20% and 25% discount respectively.

Michal Bucek, marketing director of Bootcamp Ltd in Hong Kong, said: “People come for all kinds of reasons, some for lose weight, some they want to prepare for running competition, some just want to find a friend. Bootcamp offers it all.

“A large variety of exercises is a must. Of course, some exercises we will repeat but it’s up to the trainer to keep clients coming back. Also our trainers look after each client to make sure they are doing the exercises correctly. Many other programs are not as personal as Bootcamp, and we set a maximum limit of 15 people per class. If the class is successful, we would rather add one more after or before, but we want to make sure that all our clients getting the best.

“You don’t need to be fit to come along to our classes, we will make you fit and feel good. Plus you will definitely drop few pounds on top.”

All three companies join forces three times a year to run Asia’s Biggest Boot Camp, which is a series of three boot camp retreats, where 20-30 people will get together at a luxury complex for a fitness weekend. These are held in Thailand, Singapore and Hong Kong, and next year they are looking to branch out into Japan and Nepal. All details can be found at www.bootcampasia.ning.com

Both UFIT and Fitcorp Asia work with companies who want to improve the health and fitness of their staff, and while the boot camp may not appeal to everyone, there are plenty of other options available, such as yoga and pilates – but the corporate classes are generally based on a survey of what the staff would like to be doing.

Mr Remon said: “We will go in and do general fitness assessments, then do a survey of the employees to ask them exactly what they would want to participate in.”

If you fancy getting fit in the fresh air, and sharing the pain with like-minded people, then the boot camp method could be for you.

So I can appreciate the fact that many parents will not want to think about how much their child or children are going to cost them to bring up. But when you do, my goodness it can come as a shock.

Believe it or not, the cost of raising a child from cradle to college – past their 21^st birthday – is a whopping £210,000 according to the latest survey from insurer LV=, which watches this kind of thing. That figure has gone up by 50% since 2003. Sobering reading, isn’t it? These are UK prices, granted, but the figures are unlikely to be much different for expat parents in Asia. Recent figures for South Korea alone show that it costs around US$231,000 – or 260 million won – to raise a child in South Korea from birth to graduating from college.

Now, none of us begrudges our children anything, we want them to have the best of everything – the best education, the best experiences, the best chance of getting a good job when they get older – but like it or not, that all costs money.

Planning ahead for the cost of bringing up children is not always possible – not everyone plans when they start a family, sometimes they are just blessed unexpectedly – and losing one income in a household where you are both used to working can create a double whammy when your outgoings are also increasing. Going back to work means arranging childcare, again a cost which has to be considered against the benefit of a wage.

But no matter where you are in your child’s stage of life, it is never too late to start putting some money away for their future. A regular savings plan to put something away each month – whatever you can afford to spare – will help with everything from school fees to university costs, or even give your child the chance of having a deposit for a first home in the future. It is also a great way to encourage your children to learn about the value of money, by getting them involved at an early stage in the investment process.

Using an adviser to go through your needs and help you frame the best savings options available is a wise move, especially as many of us can empathise with the cost of bringing up children.

First published in Asia Life

In the current economic climate, with difficulties in the European economies being echoed in the USA, and although less obviously, also in Asia, portfolios can get themselves out of shape far more quickly than you might expect. You can think of portfolio management as an exercise regime – regular checks will make you look more carefully at your portfolio’s love handles, and you will be able to sort them out before they become a middle-aged spread. But if you leave it too long, or your portfolio becomes gorged on fast rising prices, or weak and skinny through fast falling ones, you will find you have to do a lot more work to get its metaphorical six-pack back.

Right now, markets are bouncing up and down like yoyos, but in recent weeks there have been more falls than rises as much of the world teeters on the brink of a double-dip recession. But there are some things you can do to protect your portfolio, even at times like this.

For example, there are certain stocks that are affected far less by a downturn than others. Think about stocks relating to things that no matter what the economy is doing, people cannot do without. These would include utilities stocks – people will always need to heat their homes, to have light, and to cook for themselves – and pharmaceuticals, as people will always need medicine for illness. Ironically, when times are tough, people often will get more sick as they are dealing with greater stresses than they would be when they have more money in their pockets.

Other essentials include food, so supermarket groups are also likely to do better in a falling market. Don’t expect them to buck the trend though, these stocks are also likely to lose ground. But generally, they will lose less ground than those stocks around them. In some areas, such as Japan where the tsunami rebuilding is continuing, you may also find that infrastructure stocks have good prospects, and communications companies may provide some relief, as the world continues to find better and cheaper ways of doing business through modern networks.

It is also worth looking at the dividends that are being paid by companies. A dividend is paid once or twice a year by a company to shareholders as a ‘reward’ for investing. The dividend is paid at a set level, so if the share price drops, the dividend will – relatively speaking – become more valuable. The more income you can get on your money, the more you have available as disposable income, or if you reinvest it, the faster your fund pot will grow.

Depending on how your portfolio has been structured, and how it is currently performing, you may want to consider moving some of your investments towards these ‘defensive’ stocks. But always speak to your adviser before making a decision, as the law of unintended consequences will often apply to portfolio rejigs.

First published in Asia Life

If you have dependants, whether that is a spouse who relies on your income, and/or children who will need to be cared for after you are gone, then you should consider getting a life assurance policy. There are two types of life assurance – whole of life and term. Whole of life, as the name suggests, will cover you until you die, and a payout will be made to your dependants on death.

Term assurance on the other hand will not cover you for the whole of your life. Instead, it will cover you for an agreed period of time that you want to be insured. For example, if you have a mortgage and you want to be sure that if you die before the mortgage is cleared then the house is paid for, you would take a term policy for the period of the mortgage.

If you are repaying the mortgage rather than using an investment vehicle to generate a lump sum to clear the mortgage at the end of the agreement, then you may want to consider decreasing term assurance, where the payout will fall in value as you near the end of the contract. This can save you money, but you need to be sure you are not going to be left with a shortfall.

By writing the policy into trust, which is a relatively simple thing to do with the right advice – you can keep any payment out of your estate for death taxes, leaving more for your nearest and dearest. The way your estate is treated on death will change depending on where you are domiciled. If you are a UK expat for example, even if you have not lived in the UK for years but still have property or assets, or even regularly visit the UK, then HM Revenue & Customs will aim to tax your worldwide assets on death.

The same applies for US Estate Taxes for US Citizens – just because you have left a country to live overseas, it does not mean the taxman from your ‘home’ country cannot reach into your pocket after you have gone. No matter where you are living, you should write a will so no-one is left wondering what you would have intended to happen to your worldly possessions. This will not only ensure your final wishes are carried out, it can also have the added bonus of preventing your beneficiaries from losing money in tax to the relevant authorities.

Perhaps more importantly, it will also prevent your nearest and dearest having to make a variety of complicated decisions about your estate at what is going to be a traumatic time for them anyway. Remember though, an out-of-date will is as little help as no will at all, and can make life for those left behind more complicated, especially if you have been divorced or have children with another partner. You need to keep your will updated as your life changes, and if I have prompted you to go and check the state of your will now, then so much the better.

If I haven’t, then let me be clearer – what are you waiting for? You should take advice now to be sure your loved ones are properly cared for when you are no longer here.

First published in Expatriate Lifestyle

The flip side of this is that, unfortunately, you will also never be sure whether the experiences you will have and the challenges you will face are good or bad. Preparing yourself for the worst, but hoping for the best is often the most you can do.

When it comes to your financial affairs and making sure they are all in order, it is easy to say that you will ‘deal with that tomorrow’. It is rather like dieting, which many of us plan to start ‘tomorrow’, but then ‘tomorrow’ becomes a transient target that is never hit, resulting in your failure to achieve either financial security, or a smaller waistline.

Nothing brings home the importance of proper financial planning more readily than shock news that someone you care about is suffering from a chronic, life-threatening illness. Some families have their loved ones taken from them without any warning at all, and the ‘tomorrow’, when they planned to make sure their family was properly taken care of, never comes.

I don’t mean to be downbeat, but there is no easy way of driving home the importance of ensuring you have all of your financial affairs in good order all of the time. You need to be prepared for the unexpected, and that is something that cannot be put on a back burner. So if there is something that you want to sort out financially, make it a priority.

First published in Expatriate Lifestyle