DBS Triple Happniess Fund. Trouble again?
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[B]A notice[/B]
Yesterday night, I received a grey letter from DBS. The letter contained updated information on a fund called “DBS Triple Happiness Capital Guaranteed Fund” which my mum and I took out part of my inheritance and place $20,000 into that fund in early 2006, to reap better interest as compared to the miserable fixed deposit rate they were giving then.
As I continued to read the letter, my heart sunk when they said this sentence on page 2 “In the event of a default by AIG Inc, it is possible that Banque AIG may not honor the Guarantee and agreements entered in the with the funds” . What this sentence simply means is if AIG were to collapse, AIG Banque being a family member of AIG will also likewise or maybe collapse, therefore our fund in this Triple happiness will no longer be guaranteed thus exposing our funds to all the indexes that they (DBS asset management) invested in. In addition I did my research and found the effects of this notion:In the event that AIG Banque will not honor the funds, DBS asset management team will either
1) Choose another grantor, such as Aviva, Great Eastern in doing incur additional cost that will be taken from the fund. (Additional cost)2) Terminate the fund at current market price. (10% loss as current market price is now 0.91 as of 27th September 2008)
3) Continue the fund in which the fund will no longer have the name “Guaranteed” , in other words, your fund will not be protected and will be diversified among all the indexes that they the DBS management team have invested in (Exposed to market risks)
This research made me sick to my stomach; didn’t I invest in a GRUANTEED FUND? How come can turn out like this?[B]Is AIG really safe?[/B]
I took a brief look at AIG’s accounts and this is what I found
June 2008
Total Assets: $1,049,876,000,000
Total Liabilities: $971,688,000,000
Net asset value: $78,188,000,000
Woah! Safe what right? How come AIG still need to get extra capital from Federal government?
But think again! Under their assets, there are accounts such as Fixed maturity securities, Equity securities, Mortgage and other loans receivable, Real estate and other fixed assets. Some of these assets are subprime or subprime related, their securities are also mixed into subprime problems.
Their account Fixed maturity securities worth $423,000,000,000, if I’m not wrong , are also mortgage related.
Therefore I’m pretty sure that their net asset value is NOT $78Billion, its really net asset value will have to be calculated, once the FBI investigates properly into their accounts.INSURER AIA yesterday continued to allay the concerns of edgy policyholders, reassuring them that its parent firm AIG will not reduce the capital of its subsidiaries or tap into Asian operations for cash.
The statement from AIG comes on top of news yesterday that the American insurer has received a US$85 billion (S$122 billion) loan from the US Federal Reserve that will effectively enable it to stave off bankruptcy.
Alpha Financial Advisers' chief executive Arthur Lim said that it brings some reprieve to a very bad situation and would buy the firm some time to get its house in order.And Mr Gary Harvey, chief executive officer of ipac Wealth Management Asia, urged customers who are thinking of surrendering their plans to ignore the noise in the marketplace
http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20080918-88471.html
Furiously, I personally went down to one of the POSB branches the next day and enquired about this fund. As usual, the relationship manager assures me that my funds are safe for now, telling me not to worry for now, that AIG Banque is safe for now. The thing that bothers me the most is the two words “FOR NOW”, ok so what happens after, “For now”, in the event should AIG collapse what should policy holders such as myself do?[B]Unsure[/B]
I wasn’t really happy with the replies that the relationship manager gave, as she kept beating around the bush when questions such as what will be the cost incurred to policies holders should DBS Asset.M team change to another Guarantor? What should we do to maximize our compensation from investing in this fund, if AIG were to really collapse? How will DBS deal with this situation in its best possible way , not to make policies holders panic if such an event were to happen?
Fortunately I wasn’t the only there who was unhappy with DBS triple happiness, this elderly dressed in his weekend best, was arguing with another relationship manager right next to my counter, he scolded her loudly “Don’t lie to me OK!? I don’t care what AIG; what sub prime shit, all I DON’T CARE hor, all I know is DBS guaranteed this fund and I want my money BACK!”. Apparently he didn’t realize that AIG Banque was the guarantor and was stated in the brochures/ prospectors of all triple happiness funds.[B]Not that great after all[/B]
In addition, the structure of the fund itself is not that great neither, no doubt giving us a 6.5% interest at the end of 6 months was decent, we as policy holders have to hold the policy for the long 5 years, which is 1.3% per year, this doesn’t even include the management fee of 3% and Singapore’s inflation of currently 5-6%. In other words, the actual calculation is 6.5%-3%-5%= -2.5% , our money are still affected by inflation at lesser rate of 2.5%.
It can also be argued that this fund provides early termination if market is good. But from the looks of today’s market , it seems we definitely have to hold until maturity as we all know that market nowadays are very bad.[B]What can we do?[/B]
Then that bring me to my other point, what can we as policy holders do? We can either
1) [I]Complain to DBS first and if all else fails complain to Financial Industry Disputes Resolution Centre for Misrepresentation. [/I]
- Many people like myself who signed up for this fund were not aware that AIG Banque was the guarantor as there was little emphasis from the relationship manager on such risks at that point in time when I invested, I had the impression that it was DBS, as the relationship manger who introduced me to this fund, said that this fund was 100% safe, even safer then Government bonds, that is what induced me to go head investing in this fund.
Numbers to call:
Tel: 18002211111 ask for the triple happiness fund manager or a representative
Tel: (65) 63278878 Financial Industry Disputes Resolution
2) [I]Suffer the additional cost of getting another guarantor[/I]-Finding another guarantor will not be easy, especially if the fund is trading at a loss. If Asian markets were to go down even further, the cost of obtain another guarantor will be higher?
There might also be a probability that finding another guarantor becomes impossible, should the market value of this fund were to drop even further. Per unit price for triple happiness as of 27th of September 2008 is 0.91 any policy holder who were to terminate the fund now will suffer a loss of 10% of their initial capital, this doesn’t not include any additional cost as stated in the fund or inflation or erosion of time value of money.
3) [I]Demand for some compensation from DBS asset management or the bank itself as a whole. Compensation for either the cost of obtaining a new guarantor or suffering from any paper loss. [/I]
-You guys marketed this product so aggressively and passionately to me and now you tell me that the fund is not guaranteed anymore and as policy holder I’m to bear the additional cost of getting a new guarantor or suffer paper loss if the fund were to be terminated , isn’t that abit too much.
I believe the right thing to do is to compensate some or all the cost for me or for us, this is because not doing so, the Bank as a whole, might loss out on more of its retail customers having gone through the DBS high notes which wasn’t enough and now this Capital guaranteed suddenly turn out to be not guaranteed. Too much! Really too much!
[B] Don’t make us suffer more[/B]Come on, DBS, not only did you exclude me and other retail investors from your preference shares, your high notes are making me worried and now your guaranteed product also have problems. I also believe a lot of investors out there are unhappy, I plead to you guys is to please compensate us, is ever AIG were to collapse in the future which then result in paying extra costs for the GURANTEED fund , don’t make DBS triple happiness into DBS triple sadness.
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The 1 trillion assets in AIG might not be worth as much due to the current financial crisis.
Washington Mutual just went belly up in the last few days.
I also question the decision by Warren Buffett to buy into Goldman Sachs at this point in time. Should wait for the dust to settle by mid-next year, then you have a clearer perspective. Perhaps his decision was politically motivated, being a shrewd investor, maybe the government convince him to buy so that other investors in the market will have more confidence.
WaMu Files for Bankruptcy Following FDIC Seizure (Update2)
By Christopher Scinta and Tiffany Kary
Sept. 27 (Bloomberg) -- Washington Mutual Inc., a holding company for the savings and loan that became the biggest U.S. bank to fail, filed for bankruptcy protection along with its unit WMI Investment Corp.
WaMu, the 119-year-old Seattle-based thrift, filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware, according to a release from Business Wire. The Delaware bankruptcy Web site was closed for site maintenance. Ian Campbell, a spokesman for the bankrupt holding company with Abernathy MacGregor Group, said he couldn't provide further details.
WaMu had its banking unit seized Sept. 25 by government regulators after customers withdrew $16.7 billion over 10 days. JPMorgan Chase & Co. became the biggest U.S. bank by deposits when it bought WaMu's branches with a $1.9 billion payment to the Federal Deposit Insurance Corp.
WaMu had fallen 98 percent over the past year on losses tied to subprime lending before trading was halted on news of the FDIC seizure. The company was one of the financial firms the U.S. Securities and Exchange Commission protected from short selling this month as part of an effort to stabilize equity markets. WaMu's bank had $188 billion in deposits.
The company's collapse makes WaMu the latest victim of the credit crunch, which also forced Lehman Brothers Holdings Inc. and IndyMac Bancorp into bankruptcy, drove Merrill Lynch & Co. to sell itself to Bank of America Corp. and brought about the Federal Reserve-financed purchase of Bear Stearns Cos. by JPMorgan Chase & Co.
Ratings Cuts
The Chapter 11 bankruptcy petition, filed Sept. 26 in U.S. Bankruptcy Court in Delaware, wasn't immediately available due to Web site maintenance. The Web site was expected to be operating again on Sept. 27 at noon, Eastern time.
JPMorgan, Citigroup Inc., Wells Fargo & Co., Banco Santander SA and Toronto-Dominion Bank had all expressed interest in buying all or parts of WaMu ahead of the JPMorgan purchase.
WaMu was expected to lose as much as $19 billion on bad mortgages during the next 2 1/2 years. Standard & Poor's cut the bank's credit rating twice in nine days, to eight levels below investment grade, as chances decreased that any deal wouldn't be a buyout of the whole company, leaving creditors of the holding company to face substantial losses.
The failure of WaMu will have a ``significant'' effect on collateralized debt obligations that made bets on the lender's creditworthiness, Standard & Poor's said yesterday.
Pieces of 1,526 synthetic CDOs worldwide sold default protection on Seattle-based WaMu, S&P said in a statement.
Default Swaps
Sellers of credit-default swap protection must pay the buyer face value in exchange for the underlying securities or the cash equivalent after a bankruptcy filing.
WaMu started as the Washington National Building Loan & Investment Association on Sept. 25, 1889, 119 years to the day before its failure. A fire had engulfed downtown Seattle and residents needed a safe place to put their money, according to a history on WaMu's Web site.
Like others at now-struggling financial institutions, WaMu pushed at the height of the housing boom into riskier loans to less creditworthy buyers. WaMu was the second-biggest provider of payment-option adjustable-rate mortgages, behind Wachovia Corp., with $54 billion held in its portfolio in the first quarter, according to Inside Mortgage Finance.
Option ARMS let borrowers skip part of their payment and add that sum to the principal, so that when housing prices fall, as they have since 2006, they might end up owing more than the residence is worth.
To contact the reporter on this story: Christopher Scinta in New York bankruptcy court at [email protected]
Last Updated: September 27, 2008 01:15 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aG.D1cUCF5zU&refer=home
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I also question the decision by Warren Buffett to buy into Goldman Sachs at this point in time. Should wait for the dust to settle by mid-next year, then you have a clearer perspective. Perhaps
The fact is tat,
Nobody really knows wat is gonna happened in the future. When he invest in Goldman, he is probably thinking he make a risk and can have the potential to double his capital tat he had invested in. Now nobody really knows if he is a genius or a fool yet.
One thing for sure is,
When everything is clear, it is already be too late.
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personally i dont believe the investment products sell to me.
more than often, financial advisor dont even know what they are selling.
banks nowadays are here to make quick profits by selling investment products without knowing the truth risk. they simply put in the small print to protect themselves should thing go wrong. that is probably why the local banks claims that exposure to subprime crisis are minimal coz most of the risk has been pass on to investor like yourself.
i rather trust myself.
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Dun invest in reach capital fund again :)
Want to be rich is simple, buy blue chip and let it grow over time.
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Nwcigotbetter2001
When you purchased the fund, were you assured that the principle sum is guaranteed? Do you have receipt or document to prove it?
If you were initially assured of guaranteed return on the principle sum and now you are being told that it no longer the case, this can constitutes misrepresentation of information.
If this really the case, you may want to engage a lawyer to help you. Or if this is too expensive, you may seek fellow fund holders and do a collective legal redress.
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Originally posted by stupidissmart:
The fact is tat,
Nobody really knows wat is gonna happened in the future. When he invest in Goldman, he is probably thinking he make a risk and can have the potential to double his capital tat he had invested in. Now nobody really knows if he is a genius or a fool yet.
One thing for sure is,
When everything is clear, it is already be too late.
i would agree with you. and i think warren b would have a lot more information with him at his disposal to help him arrive at his decision. GS is a compelling buy. it's stock is trading slight above half its 52 wks high value despite the turmoil. it didn't obliterate like aig for e.g.
sure i believe there will be other financial institutions that will unravel itself in the coming months, but i think a few things hold true too:
1. the US government will never allow the financial sector belly up as a whole. it can tank the country.
2. tighter regulation will be in place between now and the next 24months to right the ship. i believe in the mid-term, things can only get better. it may take another 30-50years for the next wave of financial exuburance to `crash land' again.
3. those institutions that are able to `get help' or `manage to sell itself off' is likely to survive this dark period. there will not be many suitors, so for the rest of the troubled banks, it is facing imminent oblivion.
i cashed out early this year due to the financial jitteries. my average holding period for my stocks has been about 7 years. but i couldn't resist putting in a small amount a couple of weeks ago on aig after its bail-out announcement by the us federal gahmen. i agree it is a bet. however, i think it is an opening for me. i don't expect aig to reach its $70s mark in my lifetime. if in 3-5 years, it hit $10, i would be happy. if it hits $20/share, i will jump for joy but i hope it will touch the $30s mark. i will be estatic then.
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deleted cus this post was crap.
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I dislike Accounting . It makes me feel like a fool.
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WALL OF TEXT +9999 DMG
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Originally posted by maurizio13:
I also question the decision by Warren Buffett to buy into Goldman Sachs at this point in time. Should wait for the dust to settle by mid-next year, then you have a clearer perspective. Perhaps his decision was politically motivated, being a shrewed investor, maybe the government convince him to buy so that other investors in the market will have more confidence.
Could this move by Buffett be one of his philanthropist acts? Helping inject some confidence back in to the american economy... One Buffett beats many paulsons.
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Originally posted by whiskers:
Could this move by Buffett be one of his philanthropist acts? Helping inject some confidence back in to the american economy... One Buffett beats many paulsons.
Markets work based on psychological perceptions of investors, so if more investors see Buffett buying, they will have more confidence to invest, otherwise, they will just adopt a wait and see attitude.I certainly feel more confident when I see the world's greatest investor buying into Goldman Sachs.
Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.
Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.5 Of course, the caveat to these findings is that a counterfactual to the crisis resolution cannot be observed and therefore it is difficult to speculate how a crisis would unfold in absence of such policies. Better institutions are, however, uniformly positively associated with faster recovery.
Author: Yves Smith
Although I believe ideas should stand on their own merit, rather than on their author's credentials, I also recognize that readers want some assurance that they are not quoting a 13 year old or a dog. I have undergraduate and graduate degrees from Harvard. I have been working in and around the financial services industry since 1980 and have had over 40 articles published in venues such as The New York Times, Institutional Investor, The Daily Deal, U.S. Banker, Bank Mergers & Acquisitions, The Conference Board Magazine, BRW Magazine (Australia), and Boss Magazine (Australian Financial Review).
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MAS Press Statement
In consultation with MAS, financial institutions that have sold the DBS High Notes 5, Lehman Minibonds and Merrill Lynch Jubilee Series 3 are in the process of appointing independent parties to oversee their complaints handling and resolution processes for these products. The FIs will have to include the following matters in their terms of reference when engaging the independent party...............................
http://www.mas.gov.sg/news_room/letters_to_editors/2008/MAS_Press_Statement.html
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for 5% interest rates, I would rather buy SPH stocks at the current prices than all these notes or preference shares.
That is the confidence I have in PAP in maintaining their control of the monopolised mainstream media. :D
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Actually, even before this big unfortunate event happening, most structural deposits or "guaranteed funds" don't make money. Most were terminated early by banks as they were unable to make decent profits and hence exercise early termination.
I really doubt TS's "what can we do?" can work. I doubt DBS will give any compensation.
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Originally posted by reyes:................
banks nowadays are here to make quick profits by selling investment products without knowing the truth risk. they simply put in the small print to protect themselves should thing go wrong. that is probably why the local banks claims that exposure to subprime crisis are minimal coz most of the risk has been pass on to investor like yourself.
i rather trust myself.
Erm... not true. You may be mixing up 2 things together.
When they say exposure to subprime products, they meant actual investments and business that are in the subprime market or subprime related insitutions with direct subprime markets business.
"Small print to protect themselves" is really to "make sure" the consumers of the product understand the t&c and whatever the banks wants the consumers to know.
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Originally posted by airgrinder:
Erm... not true. You may be mixing up 2 things together.
When they say exposure to subprime products, they meant actual investments and business that are in the subprime market or subprime related insitutions with direct subprime markets business.
"Small print to protect themselves" is really to "make sure" the consumers of the product understand the t&c and whatever the banks wants the consumers to know.
When I was doing my accounting and finance, my lecturers always emphasize, "the big print are not that important, the small print are critical".
Things they don't want you to know, they put in small print.
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Originally posted by maurizio13:
I also question the decision by Warren Buffett to buy into Goldman Sachs at this point in time. Should wait for the dust to settle by mid-next year, then you have a clearer perspective. Perhaps his decision was politically motivated, being a shrewd investor, maybe the government convince him to buy so that other investors in the market will have more confidence.
My friend was screaming at you when she read this post of yours. "Who are u to question Buffett's decision! Do you even invests for a living yet!" Haha =)
Precisely being a shrewd investor, I sure he understand the odds of success sufficiently to invest in Goldman, rather than politically motivation.
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Originally posted by airgrinder:
My friend was screaming at you when she read this post of yours. "Who are u to question Buffett's decision! Do you even invests for a living yet!" Haha =)
Precisely being a shrewd investor, I sure he understand the odds of success sufficiently to invest in Goldman, rather than politically motivation.
In Finance, there is a principle that states, "past performance is not indicative of future perfomance". You have companies like Bear Stearns, Lehman Brothers and Merrill Lynch making hefty profits in the past, but it hasn't prevented their demise.Seriously, I won't mind taking a bet at this point in time too, because prices are sufficiently low enough, it's a good speculative gamble. But if I am a more prudent investor and less akin to speculation, perhaps I'd rather wait till mid 2009 to end 2009, after the dust settles and the prices stabilize before I make investments again.
It could go both ways now, either the market could pick up and the catastrophe postpone to another future date, or we could see the beginning of the 2nd great depression.
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Originally posted by airgrinder:
My friend was screaming at you when she read this post of yours. "Who are u to question Buffett's decision! Do you even invests for a living yet!" Haha =)
Precisely being a shrewd investor, I sure he understand the odds of success sufficiently to invest in Goldman, rather than politically motivation.
You can ask your friend again, what she thinks about me doubting Warren Buffett's decision.
The Dow Jones just crashed 7% (777 points) today!!!
In the next few days there is going to be lots of action in the market.
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Originally posted by airgrinder:
My friend was screaming at you when she read this post of yours. "Who are u to question Buffett's decision! Do you even invests for a living yet!" Haha =)
Precisely being a shrewd investor, I sure he understand the odds of success sufficiently to invest in Goldman, rather than politically motivation.
Today the Dow Jones Industrial Average (DJIA) dropped to a 5 year low of 8,579 from it's once lofty perch of 12,000. When Warren Buffett invested in Goldman Sachs, the DJIA was above 11,000, now it's only 8,579.
So what does your friend think of Warren Buffett investment decision now?
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Originally posted by maurizio13:
Today the Dow Jones Industrial Average (DJIA) dropped to a 5 year low of 8,579 from it's once lofty perch of 12,000. When Warren Buffett invested in Goldman Sachs, the DJIA was above 11,000, now it's only 8,579.
So what does your friend think of Warren Buffett investment decision now?
the sage of omaha won't even flinch over what happened last nite. he's not in it for yesterday or next month, or even next year.edit: just as he didn't jumped for joy when he made a >US$700m gain within hours of investing in GS.
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Originally posted by redDUST:
the sage of omaha won't even flinch over what happened last nite. he's not in it for yesterday or next month, or even next year.edit: just as he didn't jumped for joy when he made a >US$700m gain within hours of investing in GS.
So is ST Telemedia with Global Crossing.
Like they say in economics, in the long run we'd all be dead.
There is always a time for everything, while you may not have the perfect timing, it won't mean certain death but just a lesser existence.
My take is, he made a premature entry, but it's still a fair bet, much better odds then when Temasek invested in Merrill Lynch in December 2007.
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Originally posted by maurizio13:
So is ST Telemedia with Global Crossing.
Like they say in economics, in the long run we'd all be dead.
There is always a time for everything, while you may not have the perfect timing, it won't mean certain death but just a lesser existence.
fair enuf, but in truth warren did delivers. and contrary to beliefs, he did offload on gains.warren's investing philosophy goes beyond just length of time or longevity of holding the stocks, so this single dimensional discussion on the merit of stock holding timeline is meaningless when discuss in isolation.
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i am having the same problem too. should i withdraw from the DBS capital fund ? i lack confidence in the fund