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View the article online at http://citywire.co.uk/wealth-manager/article/a744458

Trust Insider: why do trust accounts say so much while saying little?

by James Carthew on Apr 08, 2014 at 00:01

Obscuring the facts

Now consider Duet Real Estate Finance , like Juridica it anonymises its investments - we know they’ve lent some money, how much, which country the borrower is in and roughly what type of assets they have as security - offices, hotels, retail for example but that’s it. Not the interest rate, not the term, no indication of the credit worthiness of the borrower. Why not?

What’s so embarrassing about borrowing money from Duet that means you refuse to let them tell the people who put it up where it’s gone?

The worst offenders in my book though are the hedge funds.

Brevan Howard Global just published its accounts. The net asset value performance of its various share classes was pretty dire ranging from +1.47% for the euro class to +2.32% for the sterling class. The accounts tell us how much was invested in each Brevan Howard fund at the end of the year and what the performance of those funds was but there’s no information on the strategies adopted by those funds in the year or their exposures.

We’re told the allocation to emerging markets held back performance but not why the manager(s) of those funds read the runes wrong – after all the beauty of a hedge fund is that it can deliver positive performance in falling markets.

I think this lack of disclosure (just 10 lines on a 44 page report explain why they allocated the portfolio in the way they did) unnerves investors. If people don’t admit why things didn’t turn out the way they’d anticipated, how are you ever going to believe they’ll improve in the future?

Everybody uses the internet nowadays, why not stick the boring stuff about the terms of reference of the various board committees on there and let the accounts just tell investors what they own, what happened last year and what might happen in the future?

James Carthew is a director of Marten & Co

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1 comment so far. Why not have your say?

Keith Cobby

Apr 08, 2014 at 20:51

I stick to investment trusts/companies whose accounts are transparent. The reason Alliance Trust's accounts are so detailed is because, like Caledonia, it is self-managed.

The companies whose accounts do not show their investments would have no place in my portfolio.

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