Automation

Automation is a wonderful thing when it works but just ask Tesla what happens when the AI and automation stops working as it should. Reason I mention this is because I knew I would be traveling so I loaded the report into the email marketing software and set the day assuming it would simply send out the report on the correct day.

Unfortunately, that didn’t happen as I expected, and wanted to apologize for the delay in getting the month end report out to you. But, that said it is a timely reminder that things don’t always go as planned and making assumptions can be hazardous to your health or at the very least your reputationJ

On a recent trip to Portugal I met a lovely retired English couple. They moved to the Algarve 2 years ago to live in the sunshine and make their retirement dollars stretch further. In my opinion the Algarve has some of the most beautiful and varied coastline anywhere in the world and if not for the frigid Atlantic Ocean their beaches would be perfect.  With the average monthly wage said to be around 1,144.61 EUR and the real average monthly wage probably closer to 800 EUR it’s a great place to live…especially in the off season from October to March…..but I digress.

Once the couple found out what I did they told me how happy they were with their Portuguese bank and its financial advisor. How their advisor had completely kept them out of the UK market and how they had kept them fully invested in the U.S and how much money they were making on their retirement nest egg?

I thought to myself…It wasn’t exactly rocket science to keep you out of the UK market during Brexit and the bull market in the U.S had meant that even a monkey throwing darts at a board would have made them money….But I bit my tongue and instead asked…..What happens to the value of your retirement nest egg when the market falls? Do you have a plan B.

Truth is most people barley have a Plan A…..Let alone a Plan BL

The market can be fickle and this talk of trade wars, a tired bull market and any number of issues could negatively impact on your retirement savings. Its even worse if you don’t have the time to make it back after a loss, because the truth is the market doesn’t know you and the market doesn’t owe you and investing in the traditional sense has an element of luck and market timing.

So, what has this got to do with FTM?

As you know FTM is not in the market and so is left mostly unaffected by market falls. But after a trip to Macau where FTM was showcased to 30 family offices I thought I could take this opportunity to explain why FTM is not affected and why the returns are so consistent as I had to do this around 30 times over the course of 3 daysJ

As you know FTM invests in discounted medical accounts receivables which is a fancy way of saying we fund surgeries, MRI’s and associated costs for personal injury cases. We have a strict due diligence policy to ensure that we can win the case should it go to court and that the insurance company will pay. Each receivable has a lien against the respective insurance company and its policy. But to make our lives simpler we work with promissory notes with fixed interest. It breaks down to 224 insurance companies, 7000 individual liens and around 30 promissory notes.

Now the reason the return is so consistent is because we know the interest that we accrue and the only variable is the amount of money held in cash (not earning interest) and the number of shares outstanding. This is also why falls in the market don’t really affect us.

So, while FTM is certainly not a bank., for this example consider FTM like a term deposit. Remember the days when banks actually paid you for using your money. Well imagine that you have $100,000 in a term deposit paying 6% per annum.  This means that you could calculate your monthly interest at 0.50% a month or 1.5% a quarter. It also means that if the market fell 50% you should still get the same return as its fixed interest and not tied to market performance.

Now for the sake of this example assume that on top of the $100,000 in the term deposit you have another $100,000 sitting in the bank but not earning interest. This means that your monthly interest drops to 0.25% and if left this way for the entire year then you would earn 3% in total.

This is pretty much how FTM works and why our returns can remain so consistent and unaffected by the market.

According to the Eurekahedge June 2018 report Hedge funds posted their second consecutive month of gains, up 0.33% in May and 0.48% year-to-date.

Contrast this with FTM

FTM Class A  = 0.68% for May
= 3.69% year to date

FTM Class B  = 1.39% for May
= 2.93% year to date

FTM Class C  = 0.86% for May
= 4.29% year to date

FTM Class D = 0.83% for May – Simple Interest
= 4.17% year to date –  Simple Interest

If you are sick of gambling or playing the market guessing game, perhaps it’s time you took a closer look at FTM and what it has to offer.

Article by Endre Dobozy

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