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New Found Money

April 23, 2013

Deal Book. Mutual funds make money. Not for their customers, of course, because that’s neither here nor there, and it’s certainly not in the contract. The customers just give them their money and it’s professionally cast adrift on the tides of the Risk/Reward Equation for the token sum or management fee of 2% or so per year, depending on the obscurity of the toss (please see our Posts, The Two Cents Worth, March 2013, or O’the Slings And Arrows Of Outrageous Fortunes, March 2013, or The Silly Season For Investment Advisers, April 2013).

However, the Assets Under Management (AUM) is our money – we can ask for what’s left of it at any time, subject to some penalties such as load fees and early withdrawal fees that are in the contract – and it is a valuable asset to the firm that has it, that is, that owns it while it has it.

For example, Columbia’s Sura financial group and Canada’s Bank of Nova Scotia teamed up today to buy the assets under management of the Peruvian pension fund, BBVA Horizonte, and they paid $1 billion to acquire control of $9 billion of investors funds. That’s 10¢ to the $1 (10%) and a lot more than what Gluskin Sheff & Associates Incorporated was apparently considering but rejected just a month ago for their assets under management (5¢ to the $1, please see our Post, (B)(N) GS Gluskin Sheff & Associates Incorporated, April 2013, and today, Reuters, April 23, 2013, Colombia’s Sura, Scotiabank buy BBVA Peru fund for $1 billion).

In our view, the owners of those funds are the ones who should be paid a “transfer fee” and a “make-up fee” because they already paid BBVA Horizonte to manage their funds, and that firm has not only given up, but been paid to do so. One feels cheated and the practice is very much at odds with what we talk about in these Posts – 100% Capital Safety and a hopeful return above the rate of inflation, no matter what.

What can a risk managed and hopeful return above the rate of inflation be? Please see our recent Post, The Wall Street Put, April 2013, for a summary of the first quarter, and what we like now.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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