WIN BONUSES FOR 55 PPI CLIENTS

Let's start off with the good news. Many of our clients who invested in the Argentum Litigation Fund in late 2010 should receive their first win bonuses in early July. These are in addition to the guaranteed interest payments which have been distributed regularly. Depending on how much was invested in the particular case and whether the investment was into Protected Notes or Units the bonuses could be up to GBP1,000 for each Note and GBP2,000 per Unit. Some clients who invested early this year may be included but all should benefit in due course as a couple more cases are due to settle and newer cases seem to be progressing well.

NEED FOR MORE FUNDS LEADS TO NEW ISSUE

As more and more cases are being submitted to Argentum, of which a percentage are deemed strong enough to support and are acceptable for full ATE insurance, investors have another opportunity to fund these cases. Stratum V has been issued and we have an allocation of GBP2,500,000 to offer to retail investors. Subscriptions can be in GBP or USD and the interest rates / maturity bonuses total 12% per annum. The closing date is July 15 but the issue will be closed earlier if fully subscribed. Very simply this is because the targeted amount can be quickly allocated to cases that are waiting for funds, whereas surplus funds would sit idle pending approval of new cases. With a guaranteed return to clients of 12% per annum it would not make commercial sense to have a chunk of money earning next to nothing in a bank account. Thus a fine balance has to be maintained between the need for funding and the actual inflow of funds.

GREEK TRAGEDY NOT HELPING MARKET DOWNTURN

Back in the conventional financial markets things have not been looking good. For seven out eight weeks major stock markets have been falling as investors fear the recovery in global economies has stalled. The debt crisis in Greece and the protests in that country against austerity measures has fuelled the potential for a default, which would have a serious impact on other European countries including the UK as well as the US, all of whom have exposure to Greek banks, not to mention their own debt and unemployment problems. Greece and its foreign lenders reached an agreement last Thursday on a five year austerity plan that Greek PM Papandreou must now push through parliament in order for Greece to stave off default.

Fallout from the March earthquake and tsunami in Japan continues to impact supply chains in the auto and other industries. These problems have been around a few months and did not prevent the markets from rising sharply for the first four months of this year.

Companies can still make good profits even when economies are flat. Recessions do not necessarily stop people buying McDonalds hamburgers and airlines are still ordering planes from Airbus and Boeing. So we should not over-react to bad economic news and start selling investments. Periods like this are great for savings plans provided they have several years to run. But the generally flat performance of the markets over the past decade and perhaps the greater uncertainties we face today make it more important than ever to ensure we have a diverse basket of assets.

DIVERSIFICATION THE NAME OF THE GAME

PPI news updates in recent times have been introducing 'out of the box' alternative investment opportunities to help mitigate the effect of market volatility associated with traditional asset class investments, such as bonds, equities and property. Thankfully cash, being the other major traditional asset class, holds good for a store of value. So what else is there to consider that will be oblivious to market volatility? The following alternative investment opportunities have little or no correlation to traditional markets and interestingly have a track record of making clients money without loss provided they are held to maturity or for suggested time periods:

• Fine Wine.
• Litigation Funding
• Managed Forestry.
• Raw Land - selectively chosen in the path of development.
• UK Student Accommodation

It's fair to say that the trade off with investing in the above alternative forms of investment versus more traditional asset classes is liquidity; but these days not prohibitively so. Contact your PPI Adviser to discover more about the terms and enhanced returns offered these alternative investment opportunities.

PENSION ISSUES HAVE NOT GONE AWAY

The squeeze on pensions is becoming a major political issue in the West, particularly Europe where people do not take kindly to reductions in benefits they have enjoyed for decades. Mass strikes are planned later this month in the UK over public cuts and pension reforms. The problem for governments and employers alike is that they simply cannot afford to maintain old-style defined benefit pensions. Many companies are severely handicapped by schemes that were established in days when stock markets rose steadily and when people did not live so long.

QROPS schemes offer a safety net and greater freedom to expats who have locked-in UK pensions that may not even survive in their present state. Because we are not living overseas it is easy to ignore the pensions issue but we do so at our peril. Also, because the consequences of inaction are not immediate we tend to put off addressing what we should be doing to plan for retirement. In a changing financial world we can no longer rely on one source of income in retirement, whether it is a pension plan or income-producing properties. A wise retirement strategy should include perhaps half a dozen very different financial instruments. No room for more details here but hopefully this will serve as a reminder to review one's plans and consider adjustments where necessary.

Eric Jordan, Bangkok, 27. June 2011
Please note this news update is primarily for information only for clients of the PPI. If you are not a client please seek professional advice before making any investment decisions.