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Brussels
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Channel
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RUSSIA
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DOMICILE OF
CHOICE
Berlin
Bremen
Amsterdam
Rotterdam
London
Smolensk
Hamburg
KINGDOM
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Sea
Vilnius
Kaliningrad
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LITHUANIA
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Leeds
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UNITED
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BEST VALUE
STRUCTURED
PRODUCTS
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Moscow
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Glasgow
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IRELAND
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Stockholm
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Melilla Oran
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MOROCCO
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Scale 1:19,300,000
Tunis
TUNISIA
Valletta
MALTA
.
Izmir
Athens
Ionian
Sea
Palermo
(U.K.)
Ceuta Alborán
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TURKEY
GREECE
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Gibraltar Málaga
Strait of Gibraltar
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Istanbul
MACE.
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BULGARIA
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L MONT. Pristina
P
KOS.
S
Lambert Conformal Conic Projection,
standard parallels 40ºN and 68ºN
0
0
Crete
300 Kilometers
20
300 Miles
Boundary representation is
not necessarily authoritative.
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CONTENTS
UP FRONT
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07
03
04
2010 BUSINESS LEADERS
Who shaped our economies and
markets in 2010?
07
SPOTLIGHT
Mark Zuckerberg: the world’s
youngest billionaire
08
WORLD REVIEW
Updates from around the globe
COMPANY NEWS
Update on deVere’s latest
developments
FEATURES
14
14
GLOBAL EQUITIES
Investment returns generated
through individual companies
15
ISLAMIC OPPORTUNITIES
A closer look at the advantages of
Shariah compliant investing
10
STRUCTURED PRODUCTS
How to pick the best value
products possible
18
DYNAMIC STRATEGIES
Controlling volatility to reduce
uncertainty
20
DOMICILE OF CHOICE
Is there “any choice” in a domicile
of choice?
TIME OUT
22
22
8 HOURS
4
Malta - 7000 years of history,
secluded bays and beautiful
beaches
24
OP 10 SPAS
T
Indulge in one of the top spas
in 2011
• deVere and Partners (Cyprus)
• deVere and Partners (Belgium) Limited BVBA,
succursale Luxembourg S.a.r.l.
• deVere Germany GmbH
• deVere Group Spain
InvestorInsight QUARTER I 2011
1
VIEW FROM THE TOP
InvestorInsight
A message from the deVere
Group’s Chief Executive Officer
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F
QUARTER I 2011
DESIGN
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EDITING
Copylab Financial Writing
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PRODUCTION
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2
InvestorInsight QUARTER I 2011
ollowing a reduction in risk appetite from investors for the past two years, it is
now prime time to project ourselves into the New Year, as we look at potential
trends that may shape the global economy and the international markets in 2011.
Where do interest rates go from here? Are developed-market bank equities worthless?
Why do we need to re-acquaint ourselves with the principles behind acquiring a
domicile of choice? Some of the world’s leading financial institutions aim to answer
these questions in this issue of Investor Insight.
The deVere Group is also looking back at some of the leading personalities that
dominated the world of business and finance in 2010. Who is your favourite? Let
us know! We may run a profile of one of the most interesting characters in our next
edition. Send us your thoughts, as well as any other feedback to investorinsight@
devere-group.com
We hope you enjoy successful investing in 2011!
Nigel Green
CEO
UP FRONT
COMPANY NEWS
deVere News
Du Pain,
du vin…
deVere sponsors
expedition to the
South Pole
The deVere Group sponsored Chris Foot’s
South Pole expedition which kicked off in
November 2010. As the principal sponsor
of this adventure, we were pleased to see
Chris Foot, once the youngest member
of the SAS, embark on the first solo
expedition, unsupported and unassisted
from Hercules Inlet to the South Pole and
back. Foot’s adventure will help raise
funds for Combat Stress, a mental health
charity that helps ex-soldiers suffering
from psychological injuries.
New IoM QROPS
The deVere Group is now offering advice on
a new type of QROPS, regulated by the Isle
of Man. Trinity, the new QROPS scheme
provided by Boal & Co provides much
more flexibility on the amount and timing
of pension than other QROPS. Additional
benefits of Trinity include:
•Pensions are paid without deduction of
any tax
•It is a non-UK payment scheme,
meaning payment of the pension fund on
death to another family member does not
attract the same penal UK tax charges
applicable to UK pension schemes.
For more information on this pension scheme, please contact one of our experienced
financial consultants to investorinsight@devere-group.com
deVere continues to expand and build on
its recent success. The company opened
two new offices in France in Q1 2011, in
Paris and Nice, bringing the total number
of deVere offices in Western Europe to
seventeen. This operation will be led by
industry veteran, Richard Bayle. Bayle,
who joined the investment and insurance
profession in 1971, worked in senior
management positions for large companies
such as Prudential and Siddalls.
Do you
have a will?
Further to a recent survey deVere carried out
amongst a group of international investors and
expatriates, it is estimated that over 50% of
respondents do not have a will. Only 57% of
those who have a will were initially advised
by a wills specialist. Furthermore 21% of
them got married, divorced or have had
children since they first took out a will, which
could mean their existing will is revoked
or does not reflect their current wishes. The
deVere Group has teamed up with one of the
UK’s top law firms Flint Bishop Solicitors, to
provide comprehensive advice and assistance
on creating a personalised will.
For more information on this service,
please go to
www.devere-group-willsonline.com
InvestorInsight QUARTER I 2011
3
UP FRONT
“Making money is art and working is art and good
business is the best art.” – Andy Warhol
Business leader
of the year
As we have entered a new year, it’s a good time to look back at some of the personalities from the
world of business and finance that have shaped our economies and markets in 2010. Who is your
winner? Who has made you sit up and take notice, filled you with admiration or surprised you with
their fortitude? Here’s our shortlist.
The Central Bankers
Heroes of the year? Perhaps. The people
with their hands on the purse strings?
Certainly. Not to be confused with
unpopular investment bankers and chief
executives of failed commercial banks
across Europe and the US, central bankers
are the top dogs of their country’s monetary
systems. They have the ability to print
money. They control interest rates. And they
are tasked with maintaining a reasonable
balance between growth and inflation.
Our selections are in this list for slightly
different reasons, though.
Ben Bernanke is the chairman of the
US Federal Reserve. His big decision in
the past year has been the introduction of
Quantitative Easing. This is the process
by which the Fed prints money to buy
4
InvestorInsight QUARTER I 2011
government bonds; thereby injecting
liquidity into financial markets. The
intention is that this encourages banks
to lend, borrowers to take out loans
and mortgages, and ultimately to foster
economic growth. The process, which was
also implemented in the UK under the
stewardship of Bank of England Governor
Mervyn King, was deemed by most
commentators to have staved off a deeper
recession than we suffered. Chairman
Bernanke recently announced a second
round of the process – nicknamed QE2 – in
a bid to generate stronger growth in the US
economy. While the financial markets were
pleased with this decision, some politicians
and economists are sceptical that QE2 is
really the solution to the US economy’s
needs. We shall see in 2011.
Meanwhile, in Europe, Jean-Claude
Trichet, President of the European Central
Bank has had a different set of problems to
deal with. He has presided over a currency
and inflation target that has been under
constant attack: from bond vigilantes,
currency speculators and financial
journalists. His has been a truly Herculean
task: managing an interest rate policy
and inflation target for a disparate group
of 27 nations, some of whose economies
are flourishing due to an export boom
(Germany), others whose economies have
wilted under the pressure of weak finances
(notably Greece and Ireland, but also
Portugal and a few others). That the euro
project remains intact after 2010 is in no
small part down to Monsieur Trichet and
his cohorts at the ECB.
2010 BUSINESS LEADERS
The POLITICIANS
This is a tough category this year. Most
politicians that have been in office for
more than a year have generally seen their
popularity plunge. This is particularly the
case in the West, where the weak financial
climate and huge debt burdens have claimed
several political casualties: not least Gordon
Brown in the UK, most likely the Irish Prime
Minister Brian Cowen in early 2011, as well
as Japan’s Yukio Hatoyama.
The beneficiaries of their demise are able
to start with a clean slate. So our first
nomination is David Cameron. This is not
a partisan selection – we’ve tried to remain
neutral to the political right and left – but
rather we’ve chosen him because of his
willingness to change the operation of
British politics. He has embraced the first
coalition in decades, and with a Liberal
Democrat party that has diametrically
opposed views in many areas. The
economic imperative that grips the UK is a
strong focus for the Cameron-led coalition
and six months after its inauguration, it
is still holding together. That’s not to say
Mr Cameron won’t become exceedingly
unpopular after the full force of his budget
cuts are felt by the British people. But
surely his determination to face up to the
UK’s financial problems is laudable. Even
if it means, as one commentator put it, the
Conservatives will become unelectable for
a generation after the austerity measures are
enacted.
For similar acts of bravery, we anoint
Germany’s Angela Merkel as the second
politician in our list. As leader of Europe’s
largest country, she has played a vital role in
the bailout of Greece, and latterly Ireland.
Her year has been spent firmly between the
proverbial rock and a hard place. Damned
if the German-led EU had not sponsored
the rescue of profligate Greece, damned
when she had, Merkel found herself in a
no-win situation. The route of supporting
the bailout may have been political seppuku
in her native Germany, but she was quick
to understand the ‘greater good’ for the
eurozone of helping out its Athenian kin.
If Mrs Merkel is a leading candidate for
Best Actress, then a nomination for Best
Supporting Actor is well deserved for IMF
president Dominique Strauss Kahn. The
organisation he leads has been instrumental
in supporting the bail out of Greece and
Ireland, and support for the euro system.
Not all long-standing politicians are
unpopular, though. President Lula da Silva
of Brazil is one of the few political leaders
to leave office in recent years with a positive
legacy and adoring support. Not since the
retirement of maverick Japanese Prime
Minister Koizumi in 2006 has a politician
enjoyed such favourable reviews at the
end of a tenure in office. He has presided
over a successful economy in the past eight
years, made strides in alleviating poverty,
made two enormous discoveries of oil, and
improved the nation’s infrastructure enough
to secure hosting rights for the World Cup
and Olympic Games for Brazil in the next six
years. An excellent legacy for a man whose
political views were feared worldwide upon
his election in 2002.
Lula’s successor is also in our list. Dilma
Rouseff is a freedom fighter turned politician
who has just become Brazil’s first woman
president. Hers is an extraordinary story,
starting with her arrest in 1970 by Brazil’s
military junta and subsequent torture by
electric shock and ‘parrot perch’ (suspended
between two metal poles). She comes from
the same socialist stock as her predecessor
and vows to continue the policy programme
of the outgoing Lula. In another landmark
event, Julia Gillard also became Australia’s
first female Prime Minister. Her story is less
unusual, while her rise to power was less
becoming – initiating a power struggle with
sitting Prime Minister Kevin Rudd. It is,
nevertheless, a noteworthy development for
female equality in Australia.
InvestorInsight QUARTER I 2011
5
UP FRONT
2010 BUSINESS LEADERS
The Investors
Two investors warrant a mention this year.
Our nominations are Warren Buffett and
John Paulson. The two could hardly be more
different in style.
The former backs an ultra-long-term
investment holding period and chooses
investments with a multi-decade time horizon
in mind. He built a $100 billion investment
portfolio from nothing over a multi-decade
period, delivering excellent profits for his
Berkshire Hathaway disciples. This year,
octogenarian Buffett hired a little known fund
manager – Todd Combs, who at 39 is half
Buffett’s age – to run a portion of his portfolio,
suggesting Combs may be his successor.
Meanwhile, the latter, Paulson, is a shrewd
hedge fund manager, who famously made
enormous profits betting against the British
banks in late 2008 and synthetic collateralised
debt obligations (CDOs) in 2009, the
instruments that were behind the financial
crisis in the US and Europe. While the ethical
merits of such investments may be a matter of
dispute, there is no doubting the investment
savvy of this hedge fund manager.
The Business Leaders
In a tough year for politicians, central
bankers and investors, the corporate sector
has been the one area of the investment
landscape that has flourished. Profits are
back at peak levels and companies are
generating cash at a prodigious rate. There
are numerous candidates for the title of
business leader of the year. Here are just
four. Our nominees are:
Steve Jobs: for making Apple the world’s
biggest technology company. It has usurped
Microsoft’s position with a string of iconic
and in-demand electronics products. In
2010, a new version of the iPhone was
popular, if beset with technical difficulties,
while the iPad reignited a dormant sector of
the electronics market – the tablet computer.
José Sergio Gabrielli de Azevedo:
for presiding over yet another huge oil
discovery off the coast of Brazil. As CEO
of Petrobras, the discovery of the Tupi
field in 2007 was the biggest find in seven
years. Another gigantic find at its Libra
field this year, said to be twice the size of
Tupi, would catapault Brazil into the top
ten oil producers worldwide. This would be
transformational for Petrobras and for the
Brazilian economy.
Bill Doyle: CEO of Potash Corp: for
successfully fending off the largest takeover
bid in the world this year, a $40 billion from
mining giant BHP Billiton. Doyle’s staunch
defence of his Canadian fertiliser company
looks to have kept Potash Corp independent,
at least for now.
And lastly Richard Branson: for Virgin
Galactic’s first venture into space tourism
with the first successful test flight.
This is another example of Branson’s
innovative drive, entrepreneurialism and
spirit for adventure. A true inspiration for
businessmen and women worldwide.
Who is your favourite? One of these esteemed men and women? Or one of your own nominations? Let us know and we
may run a profile of one of the most interesting people in the next edition. Send us your thoughts to investorinsight@
devere-group.com
6
InvestorInsight QUARTER I 2011
UP FRONT
SPOTLIGHT
Mark Zuckerberg
From zero to $41 billion in just six years, Mark Zuckerberg’s is surely the fastest rags to riches story in history. He is also the
world’s youngest billionaire and the subject of a Hollywood blockbuster movie. Not bad going for a 26 year old college-dropout.
Facebook launched in 2004 and has become
the world’s favourite social network
service. It has more than 500 million users
worldwide and Business Week recently
estimated its value at $41 billion. An
astonishing feat from a standing start just
six years ago and the prime example of the
potential profit power of the internet.
The phenomenon that has given us the
ability to connect to our friends, post
photographs and share our innermost
thoughts was started in Boston by Mark
Zuckerberg and two friends. It was
originally set up just for Harvard students,
but quickly grew and spread across America
and around the world. It is now multilingual
and the company employs more than 1,700
people in offices in eight countries.
As for Zuckerberg himself, he is a
New Yorker, the son of a dentist and a
psychiatrist. He became interested in
computer programming at an early age
and was encouraged by his father, who
hired a software developer as his tutor.
He did well at school, winning prizes
for science and classical studies, before
going to Harvard College. He dropped out
in 2004 when it was clear Facebook was
going to take off.
On his own Facebook page, Zuckerberg
highlights “openness” as one of his likes,
as well as “making things that help people
connect”. However, Facebook’s privacy
settings have become one of its most
controversial aspects, as parents worry
about who their children are connecting
with online.
The depiction of Mark Zuckerberg in the
2010 movie “The Social Network” was
generally seen as not altogether positive
and led to a charm offensive by the young
entrepreneur.
Despite some hiccups along the way,
Zuckerberg has enjoyed a phenomenally
successful six years as the leader of one of
the world’s leading internet sites and one
of the fastest-growing businesses of all
time. He is also a budding philanthropist,
donating hundreds of millions of dollars to
New Jersey public schools.
In 2010, Zuckerberg was placed number
16 in the New Statesman’s annual survey
of the world’s most influential people. Also
in 2010, Vanity Fair named him the Most
Influential Person of the Information Age.
It seems clear that Mark Zuckerberg is
going to remain an important business
leader in the internet sector for a long time
to come.
InvestorInsight QUARTER I 2011
7
UP FRONT
WORLD REVIEW
United Kingdom
Reflecting the economy’s surprisingly strong
performance in the summer of 2010, the Office for
Budget Responsibility upgraded its forecast for
UK economic growth in 2010 from 1.2% to 1.8%.
US
Criticism of the Federal Reserve’s quantitative
easing policy intensified. Several Republicanleaning economists called on Fed chairman
Ben Bernanke to call a halt to ‘QE2’, the policy
whereby the Fed will spend $600 billion on bonds
in a bid to lower long-term borrowing costs and
stimulate growth.
Ireland
The €85 billion bailout of Ireland by its EU
partners and the IMF failed to convince bond
investors and contagion spread to markets in Italy,
Spain, Greece, Portugal and Belgium.
8
InvestorInsight QUARTER I 2011
WORLD REVIEW
China
The Beijing government said it was considering
taking measures to stabilise rising prices, with
price controls being considered. Inflation in China
rose from 3.6% to 4.4% in October 2010 – its
fastest pace in two years.
Japan
The key factor underpinning the Japanese market’s
recent rise has been a fall in the yen, which was
seen to have improved the prospects for the
country’s large export sector. News that Japan’s
economy grew more quickly than expected in
quarter three 2010 also helped; GDP grew by
3.9%, up from 1.8% in April-June last year.
South Korea
It was testament to the strength of South Korean
economy that its stock market shrugged off
a military attack from its unstable Northern
neighbour.
India
India’s economy expanded at the fastest pace in
two and a half years, up 8.8% in the three months
to June 2010. However, inflation is a problem:
it hit 13.7% in June last year. As a result, the
pressure is increasing on the reserve Bank of India
to raise interest rates further.
Australia
Australian miner BHP Billiton bowed to political
opposition and withdrew its $38.6 billion offer for
Canada’s Potash Corp, bringing a swift end to its
contentious battle for control of the fertiliser giant.
InvestorInsight QUARTER I 2011
9
FEATURES
Product Design
in a Challenging
Environment
Richard Baker, Executive Director at Morgan Stanley, looks at the factors that determine the returns
available on some of the most common structured product payouts, and how investors can look to
prevailing conditions to help place their money in the best value products possible.
There is a broad range of structured
product payouts available to investors
– recent market offerings included
income paying products, kick-out
products, capped and uncapped growth
products, as well as a whole variety of
capital protection options. Of course,
as product providers, investor feedback
and demand is a very important driver
of what products we bring to market.
As market uncertainty persists, many
investors are attracted to fixed return-style
products such as digitals, kicks outs and
income products. But there is another
consideration that we need to take account
when deciding what products to launch:
the pricing environment. Sometimes,
despite huge investor demand, there’s
no point offering a particular payout if it
doesn’t offer much potential for return.
This has been an increasingly important
consideration during 2010, as market
conditions have changed so dramatically
from one month to the next – for example,
certain payouts that looked very attractive
at the start of the summer no longer really
work for investors.
This article is intended to give investors
an overview of why the terms available
on certain payouts change from one
launch to the next, and give information
to help consider which payouts offer the
best return potential in which market
conditions.
10
InvestorInsight QUARTER I 2011
Unpredictable Markets
2010 was always going to be a hard year to
call. After the rally in 2009, no-one knew
whether that would continue, whether
markets would plateau or whether there
would be another correction. In fact,
year-to-date we have seen a little bit of all
three: the year started with a dip, followed
by another rally from February to the
end of April. Eurozone fears and general
market malaise led to a further correction
in May and another drop at the beginning
of July. Since then, markets have started to
recover once more, but the outlook remains
uncertain: are we heading for inflation or
deflation? Will we see a double dip or a
V-shaped recovery? There are also political
factors: for example, in the UK, how
effective will the new coalition government
actually be and what impact will this have
on the UK economy?
Changing Volatility
Volatility measures the rate of change in the
price of an underlying asset. Low volatility
means prices are relatively stable, whereas
high volatility means prices are moving
considerably, regardless of direction.
FTSE 100 Index Performance, January 2009 – November 2010
A consistent rally during 2009, but a mixed picture in 2010.
6500
6000
5500
5000
4500
4000
3500
3000
Jan 09
Mar 09
Jul 09
Sep 09
Nov 09
Jan 10
Mar 10
May 10
Jul 10
Spe 10
Nov 10
Source: Morgan Stanley / Bloomberg, 18 October 2010. Past performance
is no indication of future performance.
STRUCTURED PRODUCTS
It therefore makes sense that market
uncertainty and high volatility go hand
in hand: As future market trends become
unclear, one would expect prices to be
more sensitive and any movements to be
more severe.
Given relatively benign market movements
at the start of the year, volatility was not
particularly high. However, as markets fell
in May, volatility spiked. But how does this
impact the price of structured products? We
know that structured products are typically
made up of a zero-coupon bond to provide
the capital protection element and an option
(or combination of options) to provide the
potential return. It is the option component
of a structured product that is impacted by
volatility. As volatility rises, so do option
premiums. This is because higher volatility
means there is perceived to be more chance
for the underlying asset to move in price and
therefore for the option to generate returns.
The impact that volatility will have on
a structured product will depend on the
particular payout profile. For some payouts,
increasing volatility will make the product
more expensive, and for others, it will have
the opposite effect:
- G
rowth products, such as capital
protected participation notes, tend to get
more expensive as volatility increases.
However, in periods of dampened
volatility, they can be useful tools to
achieve leveraged participation in any
growth of an underlying asset.
- P
roducts offering ‘soft’ capital protection
will typically get cheaper as volatility
increases. These structures include the
purchase of a zero coupon bond similar
to fully protected products, but with
the additional sale of a put option that
‘knocks in’ once a pre-set barrier is hit.
The premium received for this put option
increases as volatility increases, allowing
more to be spent on the performance
element of the product (therefore allowing
greater return potential)
- Similarly, products where returns are
capped or fixed (for example, digitalstyle payouts or autocallables) typically
become cheaper as volatility increases.
As volatility rises, there is more chance
that the underlying asset will rally above
the pre-set cap level. Investors would
only receive the fixed return up to the cap
and therefore not participate fully in the
increase of the underlying.
InvestorInsight QUARTER I 2011
11
FEATURES
STRUCTURED PRODUCTS
investors’ portfolios for structured products.
Providers like Morgan Stanley have
knowledgeable and experienced structuring
teams committed to designing payouts
that will work for each set of market
conditions. Sometimes adding a small tweak
to an existing payout can optimise the risk
reward payout for investors. For example,
something like our ‘Best Entry’ payout can
offer an attractive solution for investors
unsure about short-term market direction,
but who don’t want to miss out on any
longer-term index performance.
However, volatilities have a tendency to
trend back towards their mean following a
spike, and this is what we have seen happen
over the past few months. Therefore the
terms available on certain products (i.e.,
those with soft protection and fixed returns)
are not as attractive as they were in May and
June 2010.
Other Pricing Considerations
Of course volatility is not the only factor
that will impact the price of a structured
product. There are many different inputs
to the price, including interest rates, the
credit spread of the issuer and the dividend
yield on the underlying. The below table
shows how each of these factors is expected
to impact the price of some of the most
commonly used structured product payouts.
If a factor change results in the payout
becoming cheaper, this means that providers
can offer better terms on that payout.
It’s impossible to say which products will
price best over the next few months. If
we see a return to market volatility, the
headline-grabbing rates on income and
kick out products may come back and
satisfy investor demand for this payouttype. However, if volatility continues to
be muted, investors might want to start
considering longer term growth structures,
or products which include small tweaks to
help optimise returns.
Where Next?
Although still slightly elevated, volatility
is nowhere near the levels seen earlier in
the year, meaning the pricing opportunity
for kick out and income products is no
longer as good as it was. Growth products
can offer an alternative, but with interest
rates remaining persistently low, the terms
available are not as attractive as they might
have been in previous years. However this
does not mean that there is no place in
Factor
Regardless, by appreciating which products
price best in which market environments,
investors can ensure they are placing
their money in good value products.
Understanding the impact of different
pricing factors also goes some way to
explain why the terms available on different
payouts change from one launch to the next.
Factor Change
Impact on price
of Reverse
Convertible
The views expressed in this article are those
of its author and do not necessarily represent
those of the company she represents.
This article is issued and
approved by Morgan Stanley &
Co. International plc which is
authorised and regulated in the
UK by the Financial Services
Authority. The article has been
prepared solely for informational
purposes and is not an offer to buy
or sell any financial instrument or
participate in any trading strategy.
Impact on price of
Participation Note
Impact on price of
Autocallable
Volatility




Dividends




Interest Rates




Issuer Credit Spreads




Source: Morgan Stanley, 18 October 2010. Please note that the relationship between volatility and payout price
described above is theoretical only and based on all other pricing inputs remaining constant. In live examples, it is likely
that more than one factor will change at the same time, and therefore these relationships may not be observed. This is
not an exhaustive list of all factors that will impact structured product prices, and is provided as a guide only.
12
InvestorInsight QUARTER I 2011
FEATURES
“I’m from the
government and
I’m here to help. ”
By Malcolm Millar, Manager of the Jupiter Global Equities Fund
Former US President Ronald Reagan
thought these the nine most terrifying words
in the English language. But whatever your
views on the efficacy of, or justification for,
government intervention, it is clear that the
decisions of governments are now more
important for markets than they have been
at any time since World War II.
In the current environment, investors are
asking themselves: where do interest rates
go from here? Is developed market bank
equity worthless? Are some developed
world countries bankrupt? Can global trade
continue to drive global growth? Will global
capital flows continue to boost emerging
market asset prices? The answer to all of
these questions is: it depends primarily
on government action. That makes for a
dangerous investment backdrop.
It is worth considering the principal
problem whose effects recent government
intervention has tried to offset. Prior to
the financial crisis, banks and investors
lent money to individuals, businesses
and governments, which could not then
afford to repay them. As the crisis broke,
governments lambasted banks and markets
for their foolishness in over-lending. Now
politicians berate those same banks and
investors for their obduracy in not lending
enough.
Why the change of heart? The “free money”
created by excessively loose monetary
policy in the boom years flowed round
14
InvestorInsight QUARTER I 2011
the world causing profound distortions in
underlying or “real” economies. Businesses
formed, grew and survived which should
not have received funding to exist at all.
Asset prices, most notably house prices,
sky-rocketed. Developed or “old” world
wage and unemployment rates were
protected from the long term deflationary
effect of developing or “new” world
competition.
Now governments are trying to cope with
the fallout of this policy by throwing good
money after bad in successive rounds of
“quantitative easing” or money printing.
Their aim is to prevent painful adjustments
to the real economy: business bankruptcies,
house price collapses and reductions in
developed world standards of living. The
irony, of course, and a lesson which Japan
has learned over the last few decades, is
that without such adjustments, there can
be no resolution of the underlying problem
– that real economies have been pulled
away from sensible long-term structures. A
further difficulty is that such adjustments
would result in the bankruptcy of much of
the world’s financial system, whose very
existence depends on the prices of assets
against which they have lent remaining at or
near pre-crisis levels.
There are numerous implications for
investors. The most fundamental is that this
huge reliance of economies and financial
markets on political intervention makes any
asset allocation decision (even holding cash)
inherently more unpredictable and therefore
riskier. In such an environment, caution is
critical.
Meanwhile, underlying market forces will
continue to push to reverse the capital
misallocation of the last decade. This is
likely to generate a substantial divergence
between the winners and losers, be they
companies, currencies or countries. Many
use this logic, together with a belief in
the “decoupling” of the new world from
the old, to justify the current enthusiasm
for emerging market investments. Of
course, the strength of performance shown
by emerging markets is compounded by
further Western quantitative easing. The
latter has generated yet more “free money”
looking for better growth than the West can
currently offer.
This excess of developed-market
liquidity frustrated by domestic growth
opportunities has been a consistent feature
of emerging market booms throughout
history – and one that those currently
caught up in the headlong rush for
emerging market stocks might pause to
consider. They might also note two other
points: first, the resolution of developed
world trade deficit problems must have a
negative effect on the current trade surplus
countries; second, there is no historic
evidence of a strong correlation between
those countries with higher GDP growth
and the returns their stock markets have
generated for investors.
GLOBAL EQUITIES
The reason for this is that what matters for
investment returns is the price you pay for
a security relative to the stream of cash
earnings you own as a result. The beauty
of a global equities fund is that you can
choose the stocks which offer good value,
regardless of where they are in the world. I
think the value available in markets is now
predominantly in those areas where investor
attention is not focused: the ostensibly
lower-growth, dull, challenged developed
markets. In particular, the extent to which
high-quality US blue-chip companies have
derated over the past ten to fifteen years is
quite remarkable and, in my view, offers
investors good risk-adjusted returns over the
long term.
Another factor for investors to consider is
the current distortion of interest rates. The
initial impact of monetary easing is to keep
interest rates extremely low, and in many
cases negative in real terms. This makes
life difficult for savers who are increasingly
tempted to pursue yield without due regard
for the associated risks. It cannot be said
often enough that yields substantially in
excess of government bonds reflect the
underlying risks of the investment. Where
investors cannot see clearly what those
risks are, as in the case of many structured
products, it is foolhardy to participate.
In practice, the most transparent sources
of income for savers are often the most
traditional asset classes: cash, bonds,
property and equities. Of these, I believe
equities now look the most attractively
valued and have the added advantage of
offering the best, if imperfect, hedge against
inflation. Again, though, it is important
to pick the right equities: those whose
cashflows, competitive positioning and
balance sheets provide some comfort as to
the sustainability of the income streams they
generate.
Where does this leave us as investors?
First, we need to take care. The current
investment jungle looks particularly red
in tooth and claw. Second, we should
remember that it is individual companies
which drive investor returns. These can
have good, or indeed bad, prospects
regardless of where they are based in the
world. In running my fund, I try to identify
the best combinations of company quality,
risk and value. This approach now points
more to developed than developing markets
as the best hunting ground for investors.
Jupiter Unit Trust Managers Limited (JUTM) and Jupiter Asset Management Limited (JAM) are both authorised and
regulated by the Financial Services Authority and their registered address is 1 Grosvenor Place London SW1X 7JJ.
They are both subsidiaries of Jupiter Investment Management Group Limited and the group is collectively known as
“Jupiter”. The above commentary represents the views of the Fund Manager at the time of preparation and may be
subject to change and this is particularly likely during periods of rapidly changing market circumstances. His views are
not necessarily those of Jupiter and should not be interpreted as investment advice. Every effort is made to ensure the
accuracy of any information provided but no assurances or warranties are given.
InvestorInsight QUARTER I 2011
15
FEATURES
ISLAMIC INVESTING
Islamic Opportunities
The flight to safety has seen a renewed focus on the advantages of Shariah compliant investing.
This article was originally featured in Generali International’s publication ‘Lifetimes’, April 2010
Prudent risk management is inherent in
Islamic finance and there is an increasing
recognition from Muslim and nonMuslim investors of the link between the
fundamentals of Shariah compliance and
those of ethical investment for disciplined
growth. For the Shariah compliant
investment industry this presents an
opportunity for both Muslims and nonMuslims alike.
Shariah compliant funds provide access
to investments based on two major
screenings: firstly, unacceptable business
activities, which include companies
involved in the production, sale or
distribution of alcohol, tobacco, porkrelated products, conventional financial
services, entertainment (hotels, casinos,
cinema), weapons and defence stocks.
The second screening, following the
16
InvestorInsight QUARTER I 2011
removal of companies with unacceptable
primary business activities, is to evaluate
the remaining stocks according to several
financial ratio filters, designed to eradicate
companies with unacceptable levels of debt
or income arising from interest.
with lower volatility than its conventional
counterpart, the MSCI World Index. Such
figures show that Shariah indices, when
compared to conventional indices, actually
performed better throughout the credit
crisis.
Previously offered only through
discretionary services, the Islamic finance
industry, now estimated at a trillion dollars,
gives pause for thought. As the number of
high net worth individuals and institutions
investing in Shariah compliant funds has
grown, a number of global Islamic indices
providing performance benchmarks has
also grown. Dow Jones, FTSE, S&P
and MSCI have all launched their own
Shariah compliant indices across varying
geographical regions, sectors and asset
classes. In fact, the MSCI World Islamic
Index has delivered a sturdy track record
Due to the healthy growth potential of
this niche market, a number of widely
recognised institutions have taken notice
of this growing industry, developing their
own Shariah compliant range of funds.
To learn if Shariah compliant
investments are an appropriate
investment strategy for you,
please consult your Financial
Adviser.
FEATURES
Controlling volatility
to reduce uncertainty
The past two years have seen a reduction in risk appetite from investors, with clients reverting to less complex payoffs.
However, while payoff variety has contracted, creation of new underlying indexes has proliferated. Most notably, a new
breed of transparent rule-based indexes, known as ‘dynamic strategies’, has become very popular as their inherent
adaptability may help investors navigate through challenging market conditions
Volatility controlled options
Investors are typically attracted to
capital-protected products because they
have positive personal expectations of
the underlying assets’ future returns.
These products are typically structured
with capital protection being provided
through investment of the present value
to be protected in a zero coupon bond and
positive exposure to the underlying asset
achieved through purchase of a call option,
which may be a vanilla option or something
more bespoke. Regardless of the type of
option being used, its price will be heavily
influenced by either the volatility of the
underlying asset or the distribution of its
returns, both of which are stochastic.
However, volatility control (VC) seeks
to eliminate this source of uncertainty and
target an a priori level of selected volatility.
VC is implemented by dynamically adjusting
the investor’s exposure to an underlying
reference index. Typically, this occurs daily
and exposure ideally is a function of both
target volatility (TV) and future volatility
(FV), such that exposure = TV/FV. Because
FV is unknown, various proxies can be used,
including implied volatility or statistical
forecasting methods, but for the sake of
simplicity and transparency, most often
recent historical realised volatility (RV) is
used in place of FV.
Attractive features of VC are luring
both option buyers and sellers
Heteroscedasticity of future returns is
inevitable in stock markets as volatility
can be dramatically impacted by different
market regimes. This uncertainty creates
problems for both buyers and sellers of
18
InvestorInsight QUARTER I 2011
options, which can be remedied through
application of a VC overlay. Option buyers
find that their mark-to-market valuations
are often affected as much by changes in
volatility (which they usually have no view
on) as they are to changes in the underlying
asset (which they are solely interested in).
The dynamic control that the VC overlay
gives attempts to stabilise and normalise
the future variance of the distribution of
returns. Equity returns exhibit a distribution,
which is negatively skewed, and VC
is effectively adapting exposure to the
different market modes. It provides higher
exposure in positive market cycles, which
are characterised by lower volatility, and
automatically shields investors via lower
exposure during negative market phases
that are categorised by a high-volatility
regime. This level of control means that the
price of options can be tailored by setting a
desired level of TV and by prescribing how
the participation is to be varied. In addition,
investment returns may be enhanced by
virtue of the dynamic exposure mechanism,
in particular by automatically deleveraging
exposure to the equity underlying when
markets experience corrections.
The S&P 500 has returned 6.8% per annum
since the end of 1950. It suffered 11 bear
markets, which lasted, on average, 15 months
each, and returned -35.8% annualised
at realised volatility (RV) of 22.0%. By
contrast, the intermittent bull markets lasted,
on average, 51 months each and returned
21.4% annualised at RV of only 13.7%.
We have, in reality, at any time one of
two extremely different distributions that
prevails. As shown in figure 1, the overall
distribution is negatively skewed, though
bull market skew is positive with excess
kurtosis, suggesting a positive tail. Despite
accounting for the minority of observations
(21% of the time spent in bear territory),
the bear market skew and kurtosis dominate
the overall distribution, whereas mean and
volatility more closely resemble that of the
bull market distribution. The bull markets
witnessed historically thus compound over
long periods of time (four years, on average)
at low volatility, suggesting they can be
captured gradually. The bear market tails
happen quickly. A short-term, conservative
RV measure within the VC then allows full
exposure to bull market tails, while reducing
exposure to the bear market tails. This
ability to adapt offers a huge advantage over
more traditional structured products, which
maintain a fixed exposure.
The risk of extreme events is manifested in
the empirically observed implied volatility
skew. Since equity markets more often
gap down than up, out-of-the money puts
are more expensive than out-of-the money
calls. Option sellers, like any insurer, are
essentially charging a premium to cover
these events. The VC attempts to mitigate
these tail events, reducing risk for the seller
and hence the cost to the buyer. The VC
allows the buyer and seller to set the price
between them by greatly reducing risks
neither of them want exposure to.
Pricing analysis of VC options
As we‘ve seen, VC achieves an outcome
that is beneficial to both seller and buyer.
In the absence of vega, the actual pricing
of options becomes greatly simplified, as
DYNAMIC STRATEGIES
2 Plot of implied vols as a function of strike
1 Historic S&P return distributions by market environment
Mean
Volatility
Skew
Kurtosis
14.0
12.0
Bull
0.28%
12.02%
0.13
3.03
Bear
-0.49%
18.44%
-0.83
10.35
Overall
0.12%
14.01%
-0.49
8.97
20%
19%
18%
10.0
Implied vols
% frequency of observations
16.0
8.0
6.0
17%
16%
15%
4.0
14%
2.0
9.0
10.0
7.0
8.0
5.0
6.0
4.0
3.0
1.0
2.0
0.0
-2.0
-1.0
-3.0
-5.0
-4.0
-6.0
-8.0
-7.0
<=-10
0.0
-9.0
13%
12%
87.5
Stoch vol
Local vol
Target
Local vol (jumps)
90.0
92.5
Bull markets
Bear markets
many of the other inputs into options pricing
models are fixed or totally hedgeable. A
simple Black-Scholes model may seem like
the obvious choice to price these options
but care should be taken when pricing even
vanilla calls on a VC underlying.
To illustrate why, we consider here three
different dynamics for the S&P 500, apply
VC and look at how it affects the prices of
three-year European call options for a range
of strikes. We calibrate all models to the
same S&P-implied volatility surface. The
first model uses Dupire local volatility in
the stochastic diffusion, the second adds a
Merton jump process to the local volatility
model and the third uses a Heston stochastic
volatility model. A target volatility of
15% is used and rebalancing occurs daily
according to participation = TV/RV. Call
option prices are computed and the implied
volatilities backed out.
Figure 2 plots the implied volatilities as a
function of strike. What is immediately clear
is that the implied volatilities exhibit skew.
With the underlying volatility maintained
at the preset target level, that may seem
counterintuitive. The skew is a consequence
of the negative spot volatility correlation
that is manifest in the S&P implied volatility
surface. The skew seen here is coming
from the fact that, as spot goes down and
volatility goes up, the participation will be
reduced, which is beneficial to the option
95.0
97.5
100.0
102.5
105.0
107.5
110.0
112.5
Strike (%)
S&P weekly returns (%)
Overall
holder and hence increases the price.
The VC underlying will subsequently be
participating less in future downwards
moves. The second feature to observe from
figure 2 is that stochastic volatility is less
expensive than the local volatility without
jumps, which is less expensive than the
local volatility with jumps. Intuition here
would suggest that – in the presence of the
observed negative skew in the S&P implied
volatility surface – the stochastic volatility
model would be cheaper than the local
volatility model. In the stochastic volatility
model, as spot goes down, the instantaneous
volatility will generally increase, and this
in turn will lead to reduced participation.
In the local volatility model, as spot goes
down, the volatility will increase and in turn
lead to a reduced participation also. The
difference here is in the degree of certainty
about the spot-volatility relationship. With
positive skew, the relationship would switch
and the stochastic volatility price becomes
more expensive than the local volatility one.
Finally, the introduction of jumps increases
the price further still, as the positive gamma
of the call ensures these jumps have a
positive effect on the price.
It is interesting to note the observed skew and
model dependence of VC options. European
call options are about as simple an option
as possible and yet we have seen that there
are subtle considerations that must be made
when pricing them on a VC underlying.
As more complicated payoffs and different
underlying asset classes (foreign exchange
and interest rates, for example) are used in
VC products, new and interesting features
will inevitably present themselves.
This article was written by Maximilian
Nelte Head of Custom Indices, Global
Structuring and Peter Roche, Head
of Equity Structured Products, Asia,
Global Structuring.
Please note that the above is published
for information and general circulation
purposes only and does not constitute
nor purport to constitute any form of
advice, recommendation or offer to
sell or issue, or invitation to offer, or
solicitation, to buy, invest in or subscribe
for any product or service. The Royal
Bank of Scotland plc. Registered in
Scotland No. 90312. Registered Office:
36 St Andrew Square, Edinburgh EH2
2YB. The Royal Bank of Scotland plc
is authorised and regulated by the
Financial Services Authority. The Royal
Bank of Scotland N.V. is incorporated
in the Netherlands. The Royal Bank of
Scotland plc is in certain jurisdictions
an authorised agent of The Royal Bank
of Scotland N.V. and The Royal Bank of
Scotland N.V. is in certain jurisdictions
an authorised agent of The Royal Bank
of Scotland plc.
InvestorInsight QUARTER I 2011
19
North
Atlantic
FEATURES
Ocean
e
ag
Sk
Aberdeen
Glasgow
Edinburgh
Dublin Irish
IRELAND
UNITED
Isle
of
Man
(U.K.)
Sea
Liverpool
DEN
Cop
Leeds
Manchester
KINGDOM
Birmingham
Cardiff
Rotterdam
London
Celtic
Sea
English
NETH.
Essen
Cologne
Brussels
Lille
BEL.
Channel
Paris
ne
Sei
Bay of
Biscay
GER
Bonn
Guernsey (U.K.)
Jersey (U.K.)
Nantes
Br
Amsterdam
LUX.
Fra
Luxembour
Strasbourg
Rhi
ne
Belfast
North
Sea
S
re
Loi
Zürich
Bern
SWITZ.
Is there any “choice” in
FRANCE
MASSIF
by Rachael
Head of Product Law and Financial Planning, Skandia International
CENTRAL
A Griffin,
Coruña
Bordeaux
Lyon
Geneva
A
L
Turin
M
the case provides of the domicile rules.Genoa
In the meantime, another recent Court
Toulouse
of Appeal case, HollidayMONACO
v Musa (2010)
F
considered the domicile status of a deceased
Ligurian
Andorra
P
Turkish Cypriot
national and provides a
Robert Gaines-Cooper
YRE
la Vella
Marseille
Sea
Porto
NofE Robert
further opportunity to consider the Courts’
We are well aware of the premise that a
Many felt the long running saga
ES
approach.
domicile of choice is more than making a
Gaines-Cooper had been concluded in
Zaragoza
ANDORRA
Corsica
decision
40 to change your domicile. There has to February 2010 when a Court of Appeal
The case concerned an application for
be strong evidence to support a change. The
judicial review found that Mr Gaines-Cooper
financial provision under the Inheritance
latest written guidance on domicile from HM
did not fully meet the non-domicile status
Barcelona
(Provision for Family and Dependents) Act
Revenue & Customs (HMRC) is outlined in
requirements. In essence, the Court found that
Taguthe
s
1975. Domicile was relevant because in
the booklet HMRC6 which provides that
on the facts of the case the UK remained MrBalearic
following factors would be taken into account:
Gaines-Cooper’s “centre of gravity of his life Seaorder to bring a claim, Diana Holliday (the
Sardinia
deceased’s partner) had to establish
that
your intentions, your permanent residence,
and interests”.Valencia
Many felt this decision was an
Ramadan Musa was domiciled in England and
your ownership of property and the form of
example of HMRC moving the goalposts and
WalesBALEARIC
at the time of his death.
any Will you have made. The booklet makes it
that the need to sever all ties with the UK was
Cà
clear that this list is not exhaustive.
the only way to obtain certainty.
ISLANDS
Sevilla
The Court of Appeal reviewed the facts of
Ramadan’s life at length. Ramadan was
So why do we need to reacquaint ourselves
However, Mr Gaines-Cooper has won the
born in Cyprus, he married a fellow Cypriot
with the principles behind acquiring a Málaga
right to appeal to the Supreme Court, and
Gibraltar
and they had two children. Ramadan and his
domicile of choice? Unfortunately,
for
the
we
await
the
final
outcome
and
any
clarity
(U.K.)
When reading about a domicile of choice,
you would be forgiven for thinking that it is
actually possible for individuals to choose
where they are domiciled.
PORTUGAL
Lisbon
taxpayer, HMRC has been on a winning
streak on some recent high-profile
domicile
cases.
Bilbao
Madrid
SPAIN
Mediterranean Sea
Strait of Gibraltar
20
Alborán
Sea
Ceuta
InvestorInsight QUARTER I
2011
(SPAIN)
Melilla Oran
Algiers
Tun
Moscow
ak
err
LATVIA
Gotland
Göteborg
t
tega
Kat
¯
Riga
Baltic Sea
Vilnius
Malmö
Kaliningrad
Bornholm
Smolensk
Mahilyow
Minsk
RUSSIA
BELARUS
Gdańsk
Hrodna
r
Dniepe
penhagen
Vitsyebsk
LITHUANIA
Öland
NMARK
DOMICILE OF CHOICE
Homyel'
Chernihiv
Hamburg
Berlin
Poznań
Oder
RMANY
ankfurt
rg
Stuttgart
Munich
Prague
la
stu
i
V
UKRAINE
L'viv
Bratislava
Budapest
Vienna
I A
Mykolayiv
Chişinau
Iaşi
MOLDOVA
N
S
ClujNapoca
Odesa
T
HUNGARY
AUSTRIA
Dnie
per
Vinnytsya
Kraków
e
Danub
ROMANIA
.
S
P
Zhytomyr
M
.
Kyiv
C A
CZECH REPUBLIC
R P Chernivtsi
SLOVAKIA
Brno
A
T
H
LIECH.
Vaduz
Brest
POLAND
Lódź
Wroclaw
e
Elb
Leipzig
Warsaw
(
remen
in a domicile of choice?
Black
Ljubljana
D
Constant¸a
Bucharest
SLOVENIAI
Zagreb
N
Milan
Venice
A
BOSNIA AND
Varna
Po
R HERZEGOVINA Belgrade
Danube
I
tax returns maintained to be domiciled in
much qualifying evidence to support a change
family moved to theCROATIA
UK in 1958 following
C
A
SAN
North Cyprus, thisSERBIA
was not supported by
as outlined in both the Holliday v Musa case
sectarian
violence.
MARINO
P
Sarajevo
BULGARIA
Ramadan’s
actions.
The
Court
concluded
and the published HMRC guidelines.
A
E
Florence
Pristina
that Ramadan
had settled
“permanently or Sofia
Ramadan maintained connections with
L MONT.
Istanbul
indefinitely”P in the UK.
Cyprus and its politics. He was also an
KOS.
Adriatic
S
active member of the Turkish Cypriot
The information provided in this
Skopje
Podgorica
Sea
community in England.
Ramadan
separated
More than intent
N
article is not intended to offer
MACE.
from his wife and
she later died in 1992. He
This case
provides further evidence
that when
Rome
Bursa 40
Tirana
advice.
I
met
Diana Holliday in 1998 and had a son
considering domicile there is a distinct lack ofThessaloníki
VATICAN
N
Sea
N
ITALY
E
with CITY
her in 1999. At the time of his death
he had substantial business commitments
Naples
in England and was
in the process of
purchasing a large property in Surrey for
himself, Diana and the child to live in.
S
Tyrrhenian
Sea
àgliariThe Court of Appeal focussed on where
nis
the deceased’s permanent home was, and
in this instance he had lived in the UK for
nearly 50 years
and had owned a residential
Palermo
property all this time. Whilst he maintained
strong links with Cyprus and
in his UK
Sicily
certainty. It is not sufficient to merely show
ALB.
an intent, and it is crucial
that actions have
taken place to support a claim that either a UK
domicile has been lost or a UK domicile has
not been acquired.
It is based on Skandia’s
interpretation of the relevant
law and is correct at the time
. of
publication. While we believe
this
Izmir
interpretation to be correct, we
cannot guarantee it. Skandia cannot
Until we have further clarification from Athens
accept any responsibility for any
the Supreme Court, the rules surrounding
action taken or refrained from being
domiciles of choice remain unclear. Therefore,
taken as a result of the information
in the interim, to ensure that an individual’s
contained in this article.
TURKEY
GREECE
Aegean
Sea
Ionian
Sea
domicile position remains as robust as
possible it would be wise to have in place as
Scale 1:19,300,000
Rhodes
InvestorInsight QUARTER I 2011
Crete
21
TIME OUT
Malta
Covering just 95 square miles, Malta is one of the most soughtafter European holiday destinations because of its secluded bays
and beautiful beaches, washed by clear blue waters. Set against
the backdrop of the island’s scenery and its honey-coloured stone
buildings, Malta is simply alluring and fascinating.
Why?
It has been said that the Maltese
islands are the ‘open air museum of the
Mediterranean’, offering over 7,000 years
of history to explore, with numerous unique
world-class historical and megalithic sites.
Maltese history is centred around more than
350 churches, found all over the island.
The capital, Valletta, besides offering
some awesome Baroque buildings and
fortifications as its main sightseeing
attractions, is bustling and bursting with
restaurants and cafes.
The island’s compact size is also a plus for
visitors; it takes no more than an hour to
drive between any two points on the main
island. The dense population means that the
island is virtually one large urban area, with
22
InvestorInsight QUARTER I 2011
buildings occupying every inch.
Malta is undoubtedly a dream destination,
known for its amazing beaches; the most
renowned one, Ghadira, is the largest sandy
beach on the island.
When?
Spring and autumn are the best times to
visit Malta. Climate conditions are perfect
between Easter and mid-June, when the
weather is pleasantly warm. The high
season goes from mid-June to end-August.
Where?
Malta is the largest of the three islands that
constitute the Maltese archipelago. Malta
is in the middle of the Mediterranean Sea
directly south of Italy and north of Libya.
Attractions
Valletta’s magnificent medieval cathedral,
St John’s Co-Cathedral, is famous for
the painting by Caravaggio, which hangs
in its oratory, and the 369 inlaid mosaic
marble tombstones that cover its floor. Each
tombstone depicts the lives of the Grand
Masters of the Order of St John, buried
beneath. The façade is rather severe, but
inside the cathedral is lavishly splendid in
the grandest tradition of high Baroque, with
every inch of wall covered by carving, while
the vaulted ceiling holds paintings depicting
the life of St John the Baptist, patron saint
of the Knights. www.stjohnscocathedral.com
The Malta Experience, a dramatic
presentation that illustrates the history of
Malta, from Neolithic to modern times, can
be enjoyed at the Mediterranean Conference
Centre at St. Elmo’s bastion in Valletta.
This building itself has been impressively
restored, having been built by the Knights
in the 1500s as a hospital. The wards,
which are great sweeping halls with vaulted
ceilings and marble floors, now serve as
exhibition areas. A modern theatre has been
added where the Malta Experience audiovisual show is offered in 10 languages.
www.themaltaexperience.com
Malta’s main maritime towns have merged
into a fortified conglomerate known as the
Three Cities, resting on the promontories
opposite Valletta. Undoubtedly, the Three
Cities are best seen by foot.
Vittoriosa is the oldest town in Malta after
Mdina. It features plenty of historical
architecture, including several of the Inns
of the Knights of St John, as well as a
hospital built by the Order in 1672, which
is still a Benedictine convent inhabited by
devout nuns. Fort St Angelo, the oldest
fortified part of Vittoriosa dating from
1274, stands at the tip of the promontory,
and the Museum of Maritime History is
also well worth a visit. The youngest of the
Three Cities, Cospicua, dates from 1717
and features some interesting churches,
while Senglea, designed by Grandmaster
De La Sengle in 1551, is an important
48 HOURS
place of pilgrimage. Senglea’s parish
church contains a statue of Christ the
Redeemer that is said to have miraculous
powers.
Fashionable dining
Awarded ‘Most Romantic Restaurant’ in
Malta, the Blue Elephant is a tranquil oasis
of waterfalls, luscious greenery and tropical
flowers. With its friendly staff offering
the best Royal Thai Cuisine in Malta, the
restaurant guarantees a memorable visit.
Fresh fruit and herbs and tons of orchids
are flown in weekly direct from Thailand.
The Blue Elephant offers you the possibility
to reserve your own special space in this
magnificent restaurant. You may also
surprise your guests by reserving a private
hut for a unique atmosphere.
Address: Hilton Malta, Portomaso,
St. Julian’s
Telephone: +356 2138 3383
The art deco-designed Casino Brasserie
is located in the most exclusive casino in
Malta, situated at the heart of St. Julians,
This fine brasserie offers exquisite flavours
from the Mediterranean.
Address: The Casino at Portomaso,
Portomaso Business Tower, Level 1,
St. Julian’s
Telephone: +356 2138 3777
Paranga, the stylish restaurant at
InterContinental Beach Club in St. George’s
Bay, St. Julian’s, is definitely the place to
wine and dine. Paranga is set on a teak deck
at the water’s edge with the rippling sound
of the sea beneath. The creative dishes at
Paranga include a wonderful selection of
Mediterranean cuisine; a feast of grilled
fish, marinated meat, refreshing salads,
mouthwatering pasta dishes and much more
– all guaranteed to awaken your senses.
Address: St. George’s Bay, St.Julian’s
Telephone: +356 2137 7600
attracts only the most happening local
crowd. The decor has a modern classic lush
feel to it, with split levels and detached
seating areas. The club was designed by
one of Malta’s leading interior designers,
Philippa Toledo, and features some of the
latest design trends. Weekday evenings take
the club into a relaxed and chill-out lounge.
On weekends, the venue takes on more of a
club-like atmosphere with DJs playing the
latest tunes.
Address: Portomaso Business Tower, Level
22, Portomaso, St Julian’s
To experience traditional Maltese food, head
to Ta’Marija, the island’s most renowned
and awarded restaurant for traditional
Maltese cuisine. Regular entertainment
including traditional Maltese folk dancing
and singing are part of this unique
experience.
Address: Constitution Street, Mosta
Telephone: +356 2143 4444
Trendy shopping
Nightlife
Twenty-Two is an exclusive club lounge
situated on the 22nd floor of the Portomaso
Business Tower, the top floor of Malta’s
highest high-rise; you will get 350 square
metres of comfort and style, with 360
degrees of unparalleled views of Malta.
Twenty-two is a chic wine lounge that
The town of Sliema offers some excellent
shopping featuring worldwide renowned
brands, and a beautiful promenade as the
perfect back-drop.
If you are looking for a more exclusive
shopping experience, head to Rebelli in
St. Julian’s for luxury designer wear. The
shop exclusively represents brands such
as: Prada, Hogan, Iceberg, Cesare Paciotti,
Alviero Martini, Valentino and more.
Telephone: +356 2138 4050
Content in part provided by
A glimpse into Malta’s economy
Malta is internationally recognised as a booming financial centre. The country’s regulatory framework which has passed the European
Union test is well-positioned to offer an attractive cost- and tax-efficient base for financial services’ operators looking for an EUcompliant, yet flexible domicile. Malta’s EU status and access to passporting rights have enabled it to gain reputation as an efficient
funds domicile that can provide competitive access to the European market in recent years.
Additionally HMRC recognised Malta as a jurisdiction to which UK pensions could be transferred in November 2009. This means that
Malta-domiciled pension schemes approved by the Malta Financial Services Authority (MFSA) are eligible for QROPS (Qualifying
recognised overseas pension schemes) status. A number of Malta-based QROPS schemes have thrived since then, positioning the
island as a place of choice for people looking to invest in tax-efficient pension schemes.
Other major resources contributing to Malta’s economy are limestone, a favourable geographic location, and a productive labour
force. The economy is also dependent on foreign trade, manufacturing (especially electronics and pharmaceuticals), and tourism. The
recovery in the European economy has lifted exports, tourism, and the overall growth. Malta adopted the euro on 1 January 2008.
InvestorInsight QUARTER I 2011
23
TIME OUT
TOP 10 SPAS
Indulge in one of the world’s top spas in 2011
TOP TEN
5.
COMO
Shambhala Retreat, Cocoa
Island, Maldives
Cocoa Island is a private island resort, specifically designed for
those seeking a tranquil, foot-in-the-sand experience. The spa offers
a wide range of exotic massages and relaxation treatments, marking
it as an idyllic retreat. www.cocoaisland.como.bz
6.
Mont
Cervin Palace, Zermatt,
Switzerland
One of the finest Swiss Spa Hotels, strategically located at the foot
of the Matterhorn, which is arguably Europe’s most famous and
most photographed mountain. The pure mountain air is the perfect
backdrop for sensational pampering sessions.
www.seilerhotels.ch/mont-cervin-palace
7.
Anantara
1.
Thermes Marins Bali, Ayana Resort and
Spa, Bali, Indonesia
Set in the panoramic tropical gardens, indulge in an exceptional spa
treatments in the breathtaking “Spa on the Rock” villas, anchored
on oceanic rocks. www.ayanaresort.com
2.
The Leela Palace Kempinski,
Udaipur, India
Majestically positioned in the stone-walled city by Lake Pichola,
you can enjoy spectacular views of the ornate City Palace and
Arayali Mountains. Guests may join yoga and meditation classes,
work out in the gym, or simply lay back in the stunning pool area.
www.theleela.com
3.
Terme
di Saturnia Spa & Golf Resort,
Tuscany, Italy
Bophut Resort & Spa, Koh
Samui, Thailand
The Anantara Bophut Resort & Spa is nestled in the serene
fisherman’s cove at Bo Phut beach on Samui Island. Surround
yourself with the vibrant colours of the Anantara gardens and be
seduced by the unique Zen and Anantara treatments.
www.samui.anantara.com
8.
The
Peninsula Spa by ESPA , The
Peninsula Tokyo, Japan
The first fully-branded ESPA Spa in Japan blends with the Peninsula
group’s legendary attention to detail and impeccable Japanese
service. The spa overlooks a magnificent 20-metre pool, and offers
breathtaking views over the Imperial Palace grounds.
www.peninsula.com/tokyo
9.
Pezula
Spa, Pezula Resort Hotel & Spa,
Knysna, South Africa
This breathtaking five-star resort set in southern Tuscany is built
around the naturally abundant supply of thermal waters. The
reviving elements of the thermal waters are complemented by
the hotel’s beautiful interiors, which contribute to the sense of
relaxation. www.termedisaturnia.it/en
Pezula is a new concept in luxury spa accommodation: an
environmental estate focused on managing land for indigenous
species. The spa treatments are based on local ingredients,
including mongongo oil, baobab oil, and blue mountain sage.
The remarkable estate also offers a championship golf course
and nature trails through the native forest leading to a beautiful
beach. www.pezula.co.za
4.
10.
The Encore at Wynn Las Vegas, U.S.
Las Vegas may not be the sort of place one would equate with
a relaxing getaway, but you could be heavenly surprised! With
treatments ranging from the Lavender Stone Ritual to pure
Ayurvedic treatments, The Encore may be a pleasant alternative.
www.encorelasvegas.com
24
InvestorInsight QUARTER I 2011
The Dorchester Spa, London, United
Kingdom
Exuding the glamorous 1930s Art Deco style, the spa is undoubtedly
inspired by the iconic British style of The Dorchester. The indulgent
Spatisserie marks the perfect ending for an exclusive pampering
session in the heart of London. www.thedorchester.com
OFFICES
HEAD OFFICE
Switzerland
deVere Group Limited GmbH
SeeWurfel Nr. 2, Geschoss 4,
Seefeldstrasse 281, Zurich, 8008,
Switzerland
Email: devere@devere-group.com
China
Belgium
deVere Group Brussels
Park Hill - Building A
Mommaertslaan 18 B - 2nd floor
1831 DIEGEM
Belgium
Email: brussels@devere-group.com
deVere Group Botswana
Plot 111, Block A,
Suite 3, Millennium Park,
Gaborone International Finance Park,
Kgale, Gaborone, Botswana
Email: botswana@devere-group.com
Botswana
BRAZIL
CYPRUS
deVere Group Brazil
R. Afonso Braz, 900 - 6o Andar
04511-001, São Paulo
Brazil
Email: saopaulo@devere-group.com
deVere Group Beijing
Suite 1703, Tower A South Area
Wan Da Plaza, 93 Jian Guo Road
Chao Yang District
Beijing, PR China
Email: beijing@devere-group.com
deVere Group Shanghai
Tian An Centre,
Suite 1906,
338 Nanjing West Road,
Puxi, Shanghai 200003, China
Email: shanghai@devere-group.com
China
Client Services
Czech Republic
FRANCE
FRANCE
deVere Group Paris
19 boulevard Malherbes
75008 Paris
France
Email: paris@devere-group.com
deVere Group Toulouse
17 avenue Didier Daurat
BP 10051 Immeuble Socrate
31702 Blagnac, Toulouse
France
Email: toulouse@devere-group.com
Germany
Germany
Germany
Greece
Hong Kong
INDONESIA
Japan
KUWAIT
deVere Group Prague
Office 15 2nd Floor
Vaclavske Nam 66
110.00 Praha 1
Prague, Czech Republic
Email: prague@devere-group.com
deVere Group Frankfurt
Schillerstrasse 14
60313 Frankfurt am Main
Frankfurt
Germany
Email: frankfurt@devere-group.com
deVere Group Hong Kong
3003A, The Centrium, 30th Floor
60 Wyndham Street
Central
Hong Kong
Email: hongkong@devere-group.com
Luxembourg
deVere Group Nice
37-41 boulevard Dubouchage
06000 Nice
France
Email: nice@devere-group.com
deVere Group Hamburg
Valentinskamp 24
20354 Hamburg
Germany
Email: hamburg@devere-group.com
deVere Indonesia
Menara Prima, 25th floor, unit 25A
Jl. Lingkar Mega Kuningan,
Block 6 no. 2
Jakarta Selatan 12950 Indonesia
Email: jakarta@devere-group.com
deVere Group Barcelona
WTC Almeda Park, Plaza de la Pau
Edificio 3 - Planta 2, Oficina J
08940 - Cornellá de Llobregat,
Barcelona, Spain
Email: csv@devere-group.com
deVere Group Munich
Suite 21
Garmischerstrasse 4/V
80339 Munchen
Germany
Email: munich@devere-group.com
deVere Group Tokyo
Azabu East Building, 4th Floor,
1-25-5 Higashi Azabu, Minato-ku
Tokyo, 106-0044,
Japan
Email: tokyo@devere-group.com
deVere Group Cyprus
58 Agiou Athanasiou Avenue, Agios
El-Greco Building, First Floor,
Office 101 Athanasios,
4102 Limassol, Cyprus
Email: cyprus@devere-group.com
FRANCE
deVere Group Greece
5th Floor, 5 Mitropoleos
Syntagma Square
Athens
Greece
Email: athens@devere-group.com
deVere Group Kuwait
10th Floor, Al Shorouq Tower
Jaber Al Mubraaq Street, PO Box 22522, Sharq
13086, Kuwait
Email: kuwait@devere-group.com
deVere Group Luxembourg
6th Floor
23 Rue Aldringen
L-1118, Luxembourg
Email: luxembourg@devere-group.com
deVere Group Malaysia
Suite 29-01, 29th Floor
Menara Keck Seng, 203,
Jalan Bukit Bintang 55100 Kuala Lumpur,
Malaysia
Email: malaysia@devere-group.com
Malaysia
Mozambique
Poland
Russia
South Africa
South Africa
South Africa
South Africa
South Africa
Spain
Spain
Spain
Spain
Spain
deVere Group Palma
Calle Miguel de Cervantes 13 – local 5
07181 Costa d’en Blanes
Calvía (Mallorca), Spain
Email: palma@devere-group.com
deVere Group Basel
Steinenvorstrasse 11
4051 Basel
Switzerland
Email: basel@devere-group.com
Switzerland
Thailand
UAE
UAE
United Kingdom
deVere Group Moscow
“Mokhovaya 7” Business Centre
4/7 stroenie 2
ul.Vozdvizhenka
125009, Russia, Moscow
Email: moscow@devere-group.com
deVere and Partners Johannesburg
108 Albertyn Avenue
Corner Katherine Street
Sandton, Johannesburg 2196
South Africa
Email: johannesburg@devere-group.com
deVere Group Madrid
Calle Alcala, 418
Ciudad Lineal
28027, Madrid, Spain
Email: madrid@devere-group.com
deVere Group Geneva
World Trade Center I,
Route de l’Aeroport 10, Case postale 171,
Geneve 1215
Switzerland
Email: geneva@devere-group.com
UAE
deVere and Partners Cape Town
1st Floor Block A
7 West Quay Road
V&A Waterfront, Cape Town, 8001
South Africa
Email: capetown@devere-group.com
deVere and Partners Port Elizabeth
1 Caithness Road
Walmer
Port Elizabeth, South Africa
6070
Email: portelizabeth@devere-group.com
deVere Group Marbella
Property Finance and Legal Centre
Urb. Andasol - Ctra. N340 KM189
29604 Marbella, Malaga, Spain
Email: marbella@devere-group.com
deVere Group Thailand
Suite 2001-1, 20th Floor Exchange Tower,
388 Sukhumvit Road, Klongtoey,
Bangkok 10110, Thailand
Email: thailand@devere-group.com
deVere Group Mozambique
Av. 25 de Setembro,
420 - Edifício JAT 1, 5º andar
Caixa Postal 928
Maputo, Mozambique
Email: mozambique@devere-group.com
deVere and Partners Durban
Unit 7B, No. 4 The Crescent,
West Way Office Park
PO Box 2783, Westville, 3635
Durban, South Africa
Email: durban@devere-group.com
deVere Group Barcelona
Rambla de Catalunya 38
38 8th floor
08007 Barcelona, Spain
Email: barcelona@devere-group.com
P.I.C. Middle East Ltd. Abu Dhabi
Al Qubaissi Tower, Office 301
Hamdan Street
PO Box 6315, Abu Dhabi
United Arab Emirates
Email: abudhabi@pic-uae.com
P.I.C. Middle East Ltd. Al Ain
Palm Court Hilton Hotel
PO Box 1333, Al Ain
United Arab Emirates
Email: alain@pic-uae.com
deVere Group Kampala
Adam House, Room B4
Plot 11, Portal Avenue
Kampala
Uganda
Email: uganda@devere-group.com
Uganda
United Kingdom
Vietnam
ZAMBIA
ZIMBABWE
deVere Group Vietnam
Bitexco Building 10th Floor
19-25 Nguyen Hue Street
Dist 1, Ho Chi Minh City
Saigon, Vietnam
Email: vietnam@devere-group.com
deVere and Partners Zambia
Base Park
Alick Nkhata Road
Lusaka, Zambia
Email: zambia@devere-group.com
deVere and Partners (UK) Limited
3 Dyers Building,
Holborn,
London, EC1N 2JT,
United Kingdom
Email: uk@devere-group.com
deVere Group Warsaw
Office 222,
Atrium International Business Center,
Al. Jan Pawla II 23,
00-854, Warsaw, Poland
Email: warsaw@devere-group.com
deVere and Partners Hermanus
No. 3 Marine Square
Corner Mitchell and College Streets
Hermanus, Western Cape 7200
South Africa
Email: hermanus@devere-group.com
deVere Group Costa Blanca
Centro Comercial Arenal. Fase IV
Avenida del Pla130
1st floor. Offices 1.03 and 1.04
03730 Javea (Alicante), Spain
Email: costablanca@devere-group.com
Switzerland
P.I.C. Middle East Ltd. Dubai
404 Emarat Atrium Building
Sheikh Zayed Road
PO Box 75464, Dubai
United Arab Emirates
Email: dubai@pic-uae.com
deVere Knightsbridge
21 Knightsbridge
Westminster London
SW1X 7LY
United Kingdom
Email: knightsbridge@devere-group.com
deVere Zimbabwe
Tetrad Group 69 Josiah Avenue
Chinamano
Harare
Zimbabwe
Email: zimbabwe@devere-group.com
InvestorInsight QUARTER I 2011
25
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