Despite spectacular growth during the past 12 months, equity markets have not been kind to investors during the past 10 years.
The decade started with the excitement of new company start-ups in the dot-com era, but investors suffered horribly as the tech bubble burst and equity prices fell dramatically in March of 2000. At its peak, the FTSE100 reached 6,738 Now, 10 years later, it is around 5,578, still some way off this high. Similarly, the S&P500 at 1,149 is still some way off its 2000 peak of 1,527. With this kind of performance over 10 years, investors can be forgiven for being reluctant to invest in equities.
But not all equity markets suffered in the same way. In fact, some did very well. According to data provided by Morningstar, the financial reporting company, the best-performing offshore fund in the past decade was Parvest China Classic, with a compound average annual return of 26.2 per cent. Funds such as this one, which invest in the Chinese stock market or in foreign companies that feed off the "China effect," accounted for seven of the top 20 funds in the Morningstar list. While most expatriates will never have heard of the Parvest fund, they should be more familiar with the other Chinese funds, namely First State China Growth and Baring Hong Kong China Fund, which are commonly available through the investment vehicles offered by offshore insurance companies such as Royal Skandia or Friends Provident.
Emerging market funds dominated the performance table, accounting for 11 of the top 20 funds. Those which specialised in Russian equities provided three funds in this sector, including the top two from Baring and JPMorgan.
With compound growth rates of 25.4 per cent and 22.3 per cent annually, respectively, over the 10-year period, their performances were not far behind that of the top Chinese fund. Funds that specialised in Latin America, India and Eastern Europe (excluding Russia) made up the rest of the emerging markets sector, with eight funds in the top 20.
Two funds stopped this competition from being a complete whitewash by Chinese and emerging market funds - both of them from the highly successful Blackrock (ex-Merrill Lynch) stable. The World Gold Fund invests at least 70 per cent of its total assets in the equity securities of global companies, whose predominant economic activity is gold mining. It may also invest in the equity securities of companies that specialise in the mining of other precious metals (besides gold) and base metals. The fund does not hold physical gold or metal. The World Ming Fund has a similar structure, investing in the shares of mining and metals companies.
The above results apply to offshore funds only and exclude institutional funds - they are all available to the average investor, and many of them, as stated above, are easily bought through investment vehicles offered by offshore insurance companies.
The results are interesting, because they demonstrate the need to be invested in the right asset class rather than the right fund manager. The reason that a fund appears in the top 20 has more to do with the choice of sector than the choice of manager. For comparison, the best-performing US Large Cap fund returned 2.6 per cent each annum over the decade and the top US Small Company fund returned 10.9 per cent each year.
Ten years ago, China and emerging markets were considered to be high-risk markets. They still are, but perhaps a little less so. Similarly, small companies, anywhere in the world, are considered to be higher risk than large capitalised companies. Yet both of these risky sectors produced growth in excess of conventional equity markets. This is the way it should be; The capitalist system in which we live rewards takers of risk. (Though remember that this does not hold true in all cases.)
What should the average investor learn from all this? The obvious conclusion is that if you have time on your side, make sure that your portfolio includes some high-risk, high-growth assets.
In my view, a US dollar investor with a growth attitude to risk should have for 25 to 40 per cent of his portfolio in China, emerging markets and natural resources.
Bill Davey is a financial adviser at Mondial-Financial Partners Dubai. If you have any questions on this article or any other financial matter, write him at bill.davey@mondialdubai.com
UAE currency: the story behind the money in your pockets
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
RESULTS
6.30pm: Maiden Dh165,000 (Dirt) 1,200
Winner: Miqyaas, Adrie de Vries (jockey), Rashed Bouresly (trainer).
7.05pm: Handicap Dh165,000 (D) 1,600m
Winner: Untold Secret, Xavier Ziani, Salem bin Ghadayer.
7.40pm: Maiden Dh165,000 (D) 1,600m
Winner: Shanty Star, Fabrice Veron, Rashed Bouresly.
8.15pm: Handicap Dh190,000 (D) 1,600m
Winner: Alkaamel, Antonio Fresu, Musabah Al Muhairi.
8.50pm: Handicap Dh175,000 (D) 1,400m
Winner: Speedy Move, Richard Mullen, Satish Seemar.
9.25pm: Handicap Dh175,000 (D) 2,000m
Winner: Quartier Francois, Fernando Jara, Ali Rashid Al Raihe.
The%20specs
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How to vote in the UAE
1) Download your ballot https://www.fvap.gov/
2) Take it to the US Embassy
3) Deadline is October 15
4) The embassy will ensure all ballots reach the US in time for the November 3 poll
UAE currency: the story behind the money in your pockets
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Our Time Has Come
Alyssa Ayres, Oxford University Press
BOSH!'s pantry essentials
Nutritional yeast
This is Firth's pick and an ingredient he says, "gives you an instant cheesy flavour". He advises making your own cream cheese with it or simply using it to whip up a mac and cheese or wholesome lasagne. It's available in organic and specialist grocery stores across the UAE.
Seeds
"We've got a big jar of mixed seeds in our kitchen," Theasby explains. "That's what you use to make a bolognese or pie or salad: just grab a handful of seeds and sprinkle them over the top. It's a really good way to make sure you're getting your omegas."
Umami flavours
"I could say soya sauce, but I'll say all umami-makers and have them in the same batch," says Firth. He suggests having items such as Marmite, balsamic vinegar and other general, dark, umami-tasting products in your cupboard "to make your bolognese a little bit more 'umptious'".
Onions and garlic
"If you've got them, you can cook basically anything from that base," says Theasby. "These ingredients are so prevalent in every world cuisine and if you've got them in your cupboard, then you know you've got the foundation of a really nice meal."
Your grain of choice
Whether rice, quinoa, pasta or buckwheat, Firth advises always having a stock of your favourite grains in the cupboard. "That you, you have an instant meal and all you have to do is just chuck a bit of veg in."
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The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The%20specs%3A%202024%20Mercedes%20E200
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