| It must be said that when we decide to relocate | | | | that equity fund markets rarely share any |
| to another country such as Spain, we often focus | | | | correlation to GDP growth, because equity |
| on what we believe to be priorities such as health | | | | markets 'discount' growth well in advance (i.e. fund |
| care, dental care and general insurance and not on | | | | managers rely so heavily on economic predictions |
| our existing investments, existing retirement | | | | and forecasts, that an element of future growth |
| pension pots. The following article may either | | | | is priced into their funds at an early stage). The |
| highlight the benefits in "riding" the recent tough | | | | Credit Suisse 2010 Yearbook, which uses 109 |
| financial markets or otherwise. One point I would | | | | years' worth of data from 19 countries to analyse |
| raise is that in the same way you may have | | | | trends in returns and risk, shows that the |
| reviewed your other needs as stated above i.e. | | | | correlation between GDP growth and equity fund |
| health and dental care then perhaps it's time you | | | | returns is actually negative. |
| also had an in depth review of your existing | | | | Achieving your Financial Goals |
| portfolios and pension funds. | | | | Despite this lack of correlation, according to the |
| If the financial objective goal of your investment | | | | March edition of the Merrill Lynch Global Fund |
| is geared towards a medium/long term growth, | | | | Manager Survey, fund managers were 21% |
| then the idea of investing into funds that are out | | | | underweight in Europe, favouring emerging |
| of favour at the moment may appear a little odd, | | | | markets and America, where GDP recovery has |
| regardless of whether you are resident in the UK, | | | | been stronger. Fund Managers with a contrary |
| Spain, Italy or Malta. | | | | view to this would instead hold overweight |
| Over the previous 24 months, investors, be them | | | | positions in the likes of the UK and continental |
| domiciled in the UK, Spain, Malta or other | | | | Europe - markets which, in their opinion offer |
| geographical areas have been drawn by a number | | | | embedded value (and therefore a greater chance |
| of growth stories and as a result have placed | | | | for future growth) and are much less susceptible |
| money into the emerging equity markets, but | | | | to asset/pricing bubbles caused by |
| others believe that these markets are now | | | | over-subscription from speculative investors. This |
| overstated and that there are potentially better | | | | theory can be particularly beneficial if you have |
| investment opportunities in territories such as | | | | retired to countries such as Spain, Balearic Islands |
| Europe and the U.K. While investors feelings | | | | and Malta etc. and are delaying a retirement |
| towards these areas is of a low nature, it is | | | | income from your current investment portfolios |
| argued that their equity markets are offering | | | | and have "time" on your side. |
| financial investors greater income for their capital. | | | | Of course, all of the above can be neatly |
| Investing in Equities | | | | wrapped up under one heading; 'sentiment' which |
| Investors can become so fixated on the idea of | | | | can be an emotional word for expats now living in |
| buying 'growth' funds that they (unknowingly) bid | | | | the sunny regions of Spain looking to achieve |
| prices up to levels where any growth is more | | | | comfortable returns from their UK pension fund |
| than priced in. Therefore, with the belief that the | | | | providers. Sentiment is fuelled by many sources, |
| UK Gross Domestic Production growth ('GDP', i.e. | | | | including economic indicators, advertisers, fund |
| 'output') is predicted to be comparatively low | | | | managers and the media. Seen as one of the key |
| across the likes of Europe over the next couple | | | | drivers of global market movements, the power |
| of years, equity funds listed in these markets are | | | | of sentiment is such that it has a massive |
| seemingly unattractive. It is this view that may | | | | influence over investment returns. Ultimately, it is |
| prevent you, the investor, from missing out on | | | | the power of sentiment that determines which |
| what commentators call real 'embedded value', | | | | way 'the herd' (and therefore the majority of |
| found in relatively cheap fund prices. | | | | investment capital) heads. |
| Central to the theory is the fact that it is proven | | | | |