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- Private Asset Management Limited (PAM) is Brent Sheather and Graeme Tee who were part of Craig and Co Ltd, NZ’s largest private client stockbroker, Alan Schofield who joined the organization in 2011 and Angela Maunsell-Terry who joined the organization in 2018 to support its rapid growth.
- In March 2001 Brent Sheather bought the Whakatane Branch of Craig & Co Ltd, renaming it Private Asset Management Ltd, and Craig & Co Ltd was merged with ABN Amro NZ Ltd, becoming ABN Amro Craigs Ltd (ABN). In September 2009 ABN was renamed Craigs Investment Partners (CIP).
- PAM is based in Whakatane and has four Authorised Financial Advisors, Brent Sheather, Graeme Tee, Alan Schofield and Angela Maunsell-Terry . Brent is a member of INFINZ and has a Management Studies degree from Waikato University. He also completed the investment analysis course of study for admission to the NZ Society of Investment Analysts in 1986. Graeme is a member of INFINZ and AIMR. Between them they have over 50 years of practical experience in the investment advisory industry. Prior to this Brent was employed as an Economist at Tasman Pulp and Paper which he left after four years to form Craig & Co with Neil Craig. Graeme joined Craig & Co in 1986 as a fixed interest dealer. Brent Sheather writes regular articles on personal finance related matters and his articles are published in the National Business Review. Prior to this his articles were published in the NZ Herald. Brent's articles have been published more or less continually since 1996.
- Most of our time is spent preparing broad investment plans for clients which often focus on achieving a high and increasing income, implementing the plan, then managing the assets. Clients are typically either retired or saving for retirement and wish to be assured that the real value of their assets will be maintained while at the same time achieving a competitive return without unnecessary risk. Presently we are able to generate cash income yields of around 4.8% pa which compares well with bank rates at around 3%. Because our portfolios include a property and share dimension the 4.8% cash income yield can be expected to grow further in the medium term. Minimising risk, particularly the risk of losing money is an area upon which we place particular emphasis - many of our clients are toward the end of their working lives and thus will not have a second chance to accumulate assets again. We concentrate on only the highest quality assets in each asset class : the safest bonds, the best buildings with the strongest tenants, the largest companies. This strategy is the safest because these companies will weather a downturn far better than second tier companies. And, unlike many of our competitors, because our fees are low we don’t have to take high risks with clients money to achieve a good, after fee, return.
- Our philosophy embraces the best aspects of the stockbroking and financial planning industries in that it combines the benefits of direct investments, low fees and tax effectiveness with a focus on the achievement of specific income objectives, diversification and risk minimisation.
- Much of the demand for our services comes from individuals whose first exposure to the investment industry has been via a financial planner selling unit trusts. From a typical planner’s portfolio we are able to, in most cases, reduce annual management and monitoring fees by 50% or more, lower risk in the bond sector and significantly improve the overall level of diversification in the portfolio. On a portfolio diversified over bonds, property and shares via popular unit trusts we can typically improve long term after tax, after fee performance by 1% - 2% per annum. For portfolios within expensive master trust structures such as those used by the larger financial advisory groups the gains can be higher. Whilst our focus on fees has substantial benefits to clients our major area of "added value" is a strict adherence to benchmark asset allocations, the avoidance of fashion and the purchase of assets at a discount to market value. At the time of writing we were buying for clients a portfolio of global equities in a listed managed fund at a 20% discount to the market value of the portfolio and reasonably expect this discount to narrow over time. In the meantime clients get a 20% higher level of income than they would by owning the same portfolio via a conventional managed fund.
HOW IS OUR STRATEGY DIFFERENT?
- PAM differs from most other financial advisors in NZ in that we:
- Do not follow fashion. Blindly “going with the flow” is a recipe for disaster as the many investors with worthless technology shares will attest. We are under no pressure to “make sales”, or meet targets and are prepared to underperform in the short term in order to protect capital and ensure an attractive longer term return.
- Recognise that fees are one of the biggest determinants of returns over the long run. Our low fees reflect this belief and we have searched the globe for managed funds with low expense ratios. We invest our own money in the products we recommend and pay the same fees that our clients pay.
- Closely monitor the listed investment company universe with a view to buying assets at a discount when sectors go out of favour and similarly selling closed end funds when they go to unrealistic premiums. At the time of writing we are selling a closed end fund at an 11% premium to NAV having bought it at an average 15% discount to NAV. We are reinvesting these funds in an exchange traded fund at NAV and expect to buy back into the managed fund again at a discount within 5 years or so.
- Use realistic assumptions about future returns. In the five years ended November 2000 the world stockmarket returned 24.2% pa, due mainly to falling inflation. In the next 20 years, without the benefit of falling inflation, equity returns should average 9-10% pa before fees and tax. Fee structures of 3% pa and more are obviously ridiculous in this context.
- Are genuinely independent and are fee based advisors, so our recommendations to clients are completely free of any bias. The products we use pay no commission and none pay any trailing fees. We don’t flog “new issues” or junk bonds to clients just because they pay high commission. We don’t have a “corporate” department with loyalties to companies for whom we act. We don’t have any institutional clients. If fund managers charge high fees or generally act the goat we are not afraid to say so. We answer to our clients only. We are genuinely independent.
- Have been helping people invest their money for more than 36 years. We got first hand experience of the dangers of speculation and fashion in 1987. One of the biggest assets we bring to an investment plan is a knowledge of what constitutes a balanced portfolio and what does not.
- The starting point for many financial plans is the level of investment income required. Thus we have an intense focus on dividend income and we know r = d + g ie: the return = dividend + the rate of profit growth. We therefore focus our attention on markets and stock with the highest sustainable and safe (d). This usually involves buying funds at a discount to NAV which thus results in a higher dividend to shareholders.
- Advocate a simple “buy, hold and periodically rebalance” strategy which can be contrasted with the aggressive trading strategies that are employed by many of our high profile (and high cost) competitors. We do not aggressively trade our clients’ portfolio or our own – if we did this could compromise their capital gains tax free status.
- Use investment trusts and index funds to achieve our clients’ equity and property exposure. These products have the lowest fees available and offer suitable levels of diversity.
 See NZ Herald articles –
Counting on Dividends
What's a Going Good - Part 1
What's a Going Good - Part 2
RAISING THE STANDARD
As some New Zealanders know to their cost the standard of investment advice in NZ can vary from good to very poor. Besides earning a living one thing we have enjoyed doing over the years is highlighting some of the dodgy, stupid or humorous goings on in the NZ financial planning scene through the occasional article in the newspaper, letters to editors or, if all else fails, our weekly report to clients. Available below are a few of the more recent of these which readers might find interesting, hopefully informative, and perhaps humorous.
Dubious benefits from portfolio rebalancing - COMMENT: Financial planners may enjoy the process more than their clients …
Diversify the golden rule - Everyone has heard the old warning about putting your eggs in one basket – but many investors aren’t listening …
Mastertrusts take return out of risk & return - INVESTMENTS: High hidden fees take the gloss off this type of investment vehicle …
Advice without the strings - The world may be short of oil, but there is certainly no shortage of experts offering free investment advice …
Stabilise your shares - and mind - Investing “properly” is often easier said than done but these strategies may help …