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#1 2016-06-12 03:34:33

JulieW
Silver Stacker
From: Australia
Registered: 2010-10-14
Posts: 11,102

Vultures Circling Pensions

Hedge funds attracted a net $44 billion in assets globally last year, the smallest amount since 2012. As these increasingly desperate funds try to change that in 2016, one enormous target has been identified in Australia.

Australia has approximately USD$1.5 trillion in retirement savings, one of the largest and fastest growing pools of pension money in the world according to the WSJ. Several US asset managers are already actively working to get a foot in the door, even though management fees charged in Australia are among the world's lowest according to local lobby group Financial Services Council.

"Everyone wants to get their hands on that pie. People think there's a lot of money to be made in Australia" said Jesse Huang, director for strategic relations Boston based hedge fund PanAgora Asset Management

Other than the potential to grow AUM, the fact that Australian funds doubled their holdings of alternative assets between 2009 and 2015 has funds salivating to set up shop.

    Australian funds doubled their holdings of alternative assets—ranging from venture capital and private equity to hedge-fund investments—to an average of 8% of their portfolios between 2009 and 2015, according to Morningstar. Inflows have been especially strong over the past two years. Including infrastructure and property, Australian funds now hold about 20% of their assets outside of traditional investments such as stocks, bonds and cash.

Additionally, a recent survey by State Street showed two-thirds of Australian pension funds plan to boost their exposure to hedge funds over the next three years.

Overseas funds are putting talent on the ground because Australia is "not an easy market to enter. It's complex and highly concentrated, buyers are sophisticated and competition is fierce. Players who only come here to push product are bound to fail" said Anthony James, a partner at PwC in Sydney.

Potential clients can be tough to convince said Damian Crowley, head of distribution with Pengana Capital, a boutique Sydney fund management firm, adding that some investors "think hedge funds caused the global financial crisis." Alas, if investors have that mindset now, wait until hedge funds tie up pension funds in a bunch of high risk, highly illiquid positions just as the market sells off.

MLC, one of the largest pension funds in Australia has increased its alternative exposure by nearly 40% over the past three years, most notably to PE and energy futures, but CIO Jonathan Armitage says the A$62 billion fund is "picky."

"Our starting point is deep, deep skepticism. We make sure we only buy what we understand." Armitage said

That fact that it's a tough market to enter is not deterring some firms from moving forward however. Oaktree Capital Management, who invests in commercial mortgages and distressed debt opened up a branch in Australia in March, TIAA Global Asset Management opened a Sydney office last year, and Chicago based Northern Trust also set up a Sydney office, along with a sales team in Melbourne to offer full asset-management services to pension funds.

The shift in asset allocation undoubtedly comes from the fact that safer investment strategies are no longer an option for managers trying to generate returns, thanks to central banks going absolutely insane and driving over $10 trillion of sovereign debt into negative yields (soon to be done with corporate debt as well as Mario accelerates the global collapse to light speed with the ECBs new program).

Recall that now fixed income is yielding so little, that to earn a return of 7.5% investors would have to construct a portfolio that has nearly 3x the risk than it did in 1995. This is causing pension funds to risk even more to find yield, and thus the increased allocation to alternative assets.

Hedge funds aren't just targeting the big fish of course, retail investors are also on the radar for those looking to get into Australia.

    While foreign hedge funds are eager to target big institutional investors, they are also pitching hard to retail investors—in particular the growing number of Australians, nicknamed "selfies," who manage their own pension savings. Such investors control about a third of Australia's retirement assets.

     

    PanAgora, which makes money through complex trading strategies from high-speed algorithmic trading to leveraged short selling, offers one of its funds to mom-and-pop investors here in conjunction with Pengana Capital, a boutique Sydney fund-management firm. Among the more unusual data PanAgora mines to form its trading strategy: thousands of lost-baggage claims for potential signs of poor airline management.

* * *

Ah yes, hedge funds who introduce complex trading strategies to mom and pop investors and massive pension funds - what could possibly go wrong there?

http://www.zerohedge.com/news/2016-06-1 … sion-funds

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#2 2016-06-12 04:12:49

SpacePete
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Registered: 2014-03-01
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Re: Vultures Circling Pensions

Everyone wants a piece of that tempting pie: governments, fund managers, hedge funds, and probably many others. The last people to see any remnant of the funds will be the contributors.


Catus amat piscem, sed non vult tingere plantas

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#3 2016-06-12 05:57:04

aleks
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From: Karl-Marx-Allee
Registered: 2010-10-14
Posts: 2,392
Trades :   27 

Re: Vultures Circling Pensions

The antidote to these deadshits is to push for more low cost passive management.

I noticed recently Macrobusiness was running a survey asking if their readers would like to join a superfund if they were to start one. Not even these guys "get it". No I do not want to to join your lame fund.

http://www.macrobusiness.com.au/2016/04 … our-super/

What they should be doing instead of starting a fund is to try and convince Vanguard to offer one solely with their own passively managed/indexed products with razor thin costs. You will have Industry funds screaming BLOODY MURDER over night big_smile and it will severely limit the pool of capital that gets funneled into hedgefunds and money managers.

Last edited by aleks (2016-06-12 06:28:30)


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#4 2016-06-13 22:57:40

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
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Re: Vultures Circling Pensions

When I tell "people" about things like this they say things like "that doesn't sound right". And then when I show them articles like this they say things like "that will never happen". Even my accountant who set up my SMSF doesn't believe Superannuation is a target everyone is angling for, no matter how many reports I send her.

I don't think the community will realise what's happened until its too late. We just gotta do what we can as individuals to avoid our life savings being fleeced.

Last edited by Clawhammer (2016-06-13 23:02:49)


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#5 2016-06-13 23:10:33

Clawhammer
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From: Gone Fishin'
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Re: Vultures Circling Pensions

Labor, the Greens & coalition politicians have all signalled their desire to tap into Aussie Superannuation as a way of funding their infrastructure spending & investment dreams. Technically a Govt. owned Corp. or company like say...NBN Co. could be made a mandatory investment recipient of all Super funds @ Say 5% per fund. And while its in a growth phase, that's fine.

But what happens when it gets expanded to include mandatory investment in toll roads or rail lines or bridges... or Union dominated ports or Banking Industry controlled financial products!?

Last edited by Clawhammer (2016-06-13 23:11:03)


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#6 2016-06-13 23:24:51

raven
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From: Victoria
Registered: 2014-04-27
Posts: 1,215

Re: Vultures Circling Pensions

Clawhammer wrote:

Labor, the Greens & coalition politicians have all signalled their desire to tap into Aussie Superannuation as a way of funding their infrastructure spending & investment dreams. Technically a Govt. owned Corp. or company like say...NBN Co. could be made a mandatory investment recipient of all Super funds @ Say 5% per fund. And while its in a growth phase, that's fine.

But what happens when it gets expanded to include mandatory investment in toll roads or rail lines or bridges... or Union dominated ports or Banking Industry controlled financial products!?

The only way that I would entertain any accessing of peoples' superannuation, as in the 3.1 trillion $AUD, is to pay down the national debt !
Then the interest payments could be returned to those accounts.
This of course is not going to happen, and if so, would cause the great nation of Australia .... to be bombed !

Last edited by raven (2016-06-13 23:27:28)

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#7 2016-06-13 23:30:29

Jislizard
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From: Australia
Registered: 2011-04-07
Posts: 7,472
Trades :   57 

Re: Vultures Circling Pensions

Clawhammer wrote:

Labor, the Greens & coalition politicians have all signalled their desire to tap into Aussie Superannuation as a way of funding their infrastructure spending & investment dreams. Technically a Govt. owned Corp. or company like say...NBN Co. could be made a mandatory investment recipient of all Super funds @ Say 5% per fund. And while its in a growth phase, that's fine.

But what happens when it gets expanded to include mandatory investment in toll roads or rail lines or bridges... or Union dominated ports or Banking Industry controlled financial products!?

If they do decide to make "investing in our future" mandatory by forcing you to back infrastructure projects that no private company would touch with a bargepole...

How do they get the 5%?

I have a ton of silver (not a literal Imperial Ton, Metric Tonne or American Ton but more than I would want to carry in one trip) and a loan on a property (which is positively geared at the moment and will be paid off in eight years). I couldn't sell 5% the property and still have it as a viable investment. I wouldn't want to sell any of my precious either (it might even be at a loss at the moment though things are looking up)

Do I just get a hold on paying off the loan until I can put aside 5% in the SMSF?

If they are going to go that why don't they just add another % to the income tax so at least I am not penalised for trying to save for the future.

Thinking about it they might just decide to tax my voluntary component by 20% instead of the current 15% for salary sacrifice. But then I would just pay my investment properties outside of super instead...

All too confusing but I guess they like it like that.


Now stacking: World Junk Silver Coins.
Swap your older, worn, dirty fractional silver coins for fiat, .999 rounds or legal tender. 
Individual coins, mixed lots or bulk. 
Not looking for Australian, bent, holed or damaged coins, thanks!

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#8 2016-06-13 23:31:48

Jislizard
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From: Australia
Registered: 2011-04-07
Posts: 7,472
Trades :   57 

Re: Vultures Circling Pensions

raven wrote:
Clawhammer wrote:

Labor, the Greens & coalition politicians have all signalled their desire to tap into Aussie Superannuation as a way of funding their infrastructure spending & investment dreams. Technically a Govt. owned Corp. or company like say...NBN Co. could be made a mandatory investment recipient of all Super funds @ Say 5% per fund. And while its in a growth phase, that's fine.

But what happens when it gets expanded to include mandatory investment in toll roads or rail lines or bridges... or Union dominated ports or Banking Industry controlled financial products!?

The only way that I would entertain any accessing of peoples' superannuation, as in the 3.1 trillion $AUD, is to pay down the national debt !
Then the interest payments could be returned to those accounts.
This of course is not going to happen, and if so, would cause the great nation of Australia .... to be bombed !

I bet if they payed down the national debt they would soon build it up again.


Now stacking: World Junk Silver Coins.
Swap your older, worn, dirty fractional silver coins for fiat, .999 rounds or legal tender. 
Individual coins, mixed lots or bulk. 
Not looking for Australian, bent, holed or damaged coins, thanks!

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#9 2016-06-14 00:30:36

Big A.D.
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From: Sydney
Registered: 2009-10-29
Posts: 6,437
Trades :   52 

Re: Vultures Circling Pensions

Clawhammer wrote:

Labor, the Greens & coalition politicians have all signalled their desire to tap into Aussie Superannuation as a way of funding their infrastructure spending & investment dreams. Technically a Govt. owned Corp. or company like say...NBN Co. could be made a mandatory investment recipient of all Super funds @ Say 5% per fund. And while its in a growth phase, that's fine.

But what happens when it gets expanded to include mandatory investment in toll roads or rail lines or bridges... or Union dominated ports or Banking Industry controlled financial products!?

The big super funds have been saying for a while that they have the money and they're happy to invest in infrastructure projects, but what's actually holding them back is the lack of well planned and well structured deals on offer.

Governments have spent decades learning how to privatize existing assets (with varying degrees of success), but they've forgotten how to actually set up up the projects in the first place and also got into the nasty habit of scrapping previous governments' projects as soon as they win office.

All parties need to start making full use of independent assessors like Infrastructure Australia and commit to continuing their opponent's projects if they've been signed off as worthy investments.


I am the Leafy Sea Dragon.

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#10 2016-06-14 01:14:12

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
Posts: 9,506
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Re: Vultures Circling Pensions

^^^ Totally agree, on Govt. planning, the on-again/off-again circus of West Connex, the Toowoomba Range Crossing, the NBN and especially the $420M compo payout for cancelling East - West Link are prime examples.

But my point is, superannuation is not theirs to spend. It is put aside specifically for individuals to help fund their own retirement. (There is a clear conflict of interest for governments to get involved in investing in private enterprises with public funds. And that is aside from the point they are just diabolically bad at investing in the 1st place.)

Traditionally, The Govt. has collected enough funds to create infrastructure from our taxes. If its not enough... then what have they done with the money?

Last edited by Clawhammer (2016-06-14 01:17:58)


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#11 2016-06-14 01:45:56

Big A.D.
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From: Sydney
Registered: 2009-10-29
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Re: Vultures Circling Pensions

Clawhammer wrote:

But my point is, superannuation is not theirs to spend. It is put aside specifically for individuals to help fund their own retirement.

Sorry, my point was that the big super funds - acting in the interests of their clients - are saying they are prepared to invest in big, expensive, long term infrastructure projects if the federal and state governments can come up with fair and viable deals.

Governments aren't doing that. Instead, they're buggering around cancelling and de-funding one anther's projects.

There's stuff to build and money to be made, but the super funds just aren't getting any viable deals pitched to them.


I am the Leafy Sea Dragon.

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#12 2016-06-15 02:04:51

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
Posts: 9,506
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Re: Vultures Circling Pensions

Well, timing is everything in comedy.
I only just found out about this because my mates still back in the QLD Govt spraying their keyboards.
The Qld Labor Govt has announced they will pay off their massive debt & fund infrastructure spending by tapping into Public Servants superannuation scheme

http://www.abc.net.au/news/2016-06-14/q … bt/7506634

The treasurer is on the record as saying "This is a budget which is a good Labor budget,"
lol lol lol

Last edited by Clawhammer (2016-06-15 02:11:55)


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#13 2016-06-15 02:24:33

Big A.D.
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From: Sydney
Registered: 2009-10-29
Posts: 6,437
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Re: Vultures Circling Pensions

Clawhammer wrote:

The Qld Labor Govt has announced they will pay off their massive debt & fund infrastructure spending by tapping into Public Servants superannuation scheme

http://www.abc.net.au/news/2016-06-14/q … bt/7506634

The treasurer is on the record as saying "This is a budget which is a good Labor budget,"
lol lol lol

They're "raiding" the defined benefits portion of the fund. They know how much they need to pay out to retired public servants because, as the name implies, the figure is defined in advance (i.e. 70% of final year's salary, etc).

Having calculated what they're going to have to pay out, it seems they're $10 billion in surplus.

Knowing that $10 billion is never going to be paid out, what else should they be doing with it?


I am the Leafy Sea Dragon.

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#14 2016-06-15 02:29:00

sammysilver
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From: Sydney
Registered: 2011-04-07
Posts: 5,482
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Re: Vultures Circling Pensions

Buy round fifties!


The price we pay for the good life is public servitude.

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#15 2016-06-15 02:34:40

aleks
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From: Karl-Marx-Allee
Registered: 2010-10-14
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Re: Vultures Circling Pensions

Unfunded and surplus go hand in lol

How about putting that money aside so that its "fully funded"


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#16 2016-06-15 02:42:35

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
Posts: 9,506
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Re: Vultures Circling Pensions

Big A.D. wrote:
Clawhammer wrote:

The Qld Labor Govt has announced they will pay off their massive debt & fund infrastructure spending by tapping into Public Servants superannuation scheme

http://www.abc.net.au/news/2016-06-14/q … bt/7506634

The treasurer is on the record as saying "This is a budget which is a good Labor budget,"
lol lol lol

They're "raiding" the defined benefits portion of the fund. They know how much they need to pay out to retired public servants because, as the name implies, the figure is defined in advance (i.e. 70% of final year's salary, etc).

Having calculated what they're going to have to pay out, it seems they're $10 billion in surplus.

Knowing that $10 billion is never going to be paid out, what else should they be doing with it?

I make no comment on Govt. budget calculations. big_smile


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#17 2016-06-15 03:01:57

Big A.D.
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From: Sydney
Registered: 2009-10-29
Posts: 6,437
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Re: Vultures Circling Pensions

Big A.D. wrote:
Clawhammer wrote:

But my point is, superannuation is not theirs to spend. It is put aside specifically for individuals to help fund their own retirement.

Sorry, my point was that the big super funds - acting in the interests of their clients - are saying they are prepared to invest in big, expensive, long term infrastructure projects if the federal and state governments can come up with fair and viable deals.

Governments aren't doing that. Instead, they're buggering around cancelling and de-funding one anther's projects.

There's stuff to build and money to be made, but the super funds just aren't getting any viable deals pitched to them.

On that note...

Infrastructure Australia chairman Mark Birrell has urged governments to release business cases for big projects, saying they should be published "so frequently" they go unreported.

The release of full business case and feasibility studies before construction starts on infrastructure "should just be a common part of our way of operating," Mr Birrell told The Australian Financial Review's National Infrastructure Summit, adding decision-makers in government agencies needed to be encouraged "to do the right thing".

"Governments – federal and state – have come a long way over the last decade, but still need to establish a more rigorous evidence base for infrastructure investment decisions," Mr Birrell told the summit.

"Twelve months ago there were literally no business cases ready for projects over $100 million," he said.

http://www.smh.com.au/business/infrastr … pii4z.html


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#18 2016-06-15 05:13:42

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
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Re: Vultures Circling Pensions

Gotta be careful with Govt. business case calculations too! The business case for the Clem Jones tunnel in Brisbane reported forecast traffic volumes higher than the Sydney Harbour Bridge.... every day of the week!!


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#19 2016-06-15 11:28:44

errol43
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From: Bundaberg
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Re: Vultures Circling Pensions

Qld has until now, a fully funded public servant super scheme with all monies invested in the QIC. Now where do the other states put their state employees super contributions? Into the state coffers maybe?

Suppose you are a financial adviser, where do you put the monies you manage???How many finished ahead in the years 07/,08 and 09.

As George Carlin said, " they'll get it all"..

Regards Errol 43

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#20 2016-06-15 17:02:29

Old Codger
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Registered: 2011-05-13
Posts: 5,128

Re: Vultures Circling Pensions

The OZ Government will do all it can to get as much as it can from the Superannuation  Funds.

I doubt they would try and force them to sell up the lot and hand it over in exchange for OZ Treasury Bonds as it would cause a hell of a case of indigestion on the ASX etc.

The annual dividend and interest income etc would be a hell of a lot and probably what they have in mind.

Sec 51 xxx1 may save us!


OC


"The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields."   -  ALP Constitution.

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#21 2016-06-15 21:16:54

Clawhammer
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From: Gone Fishin'
Registered: 2010-02-26
Posts: 9,506
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Re: Vultures Circling Pensions

Old Codger wrote:

The OZ Government will do all it can to get as much as it can from the Superannuation  Funds.

I suspect its the 2nd to last cartridge left in the chamber to bail themselves out.
They'll save the last round for themselves (i.e. printing money) to save the ignominy of default. But they'll tap into private "savings" accounts before that, so I guess its the 3rd to last round in the gun. wink

Last edited by Clawhammer (2016-06-15 21:19:09)


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#22 2016-08-07 02:11:13

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Re: Vultures Circling Pensions

One of my concerns is super funds investing in public infrastructure projects. I believe governments, i.e. public servants, are generally speaking pretty awful business managers and consequently can't be trusted to do this stuff properly. There are examples here in Brisbane with a couple of tunnels which, since being completed, have spectacularly failed to generate toll revenues anywhere near the original projections.


I intend to live forever. So far, so good.

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#23 2016-08-07 02:36:53

Ipv6Ready
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From: North Sydney
Registered: 2016-01-08
Posts: 2,218
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Re: Vultures Circling Pensions

I'd rather be in the hedge fund taking my share of the money, if they pull it off.

All those funds that have low management fees, compare the fees after as net return.

Good if you only pay 1% per annum for 6% return -> net 5% return.
Better to pay 3% fees for 12% return -> net 9% return.

Low fees ain't everything. Many hedge fund return big for investors and have higher fees. I wouldn't put all my savings into it but a decent holdings.


WTB 4 to 6 grams of pure gold. Don't care if it is coin, bar or granules. Near spot, suits anyone who has been tempted to open a certicard or just have some granules to make a ring

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