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The Irish investment market is pathetic

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By Michael O’Connor, theislandinvestor.com   

I lived abroad for years, so all the investment strategies I created were typically outside of Irish tax considerations.

But over the last few weeks I have been putting together several investment strategies for Irish-domiciled clients. It has been eye-opening, to say the least.

In short, most of the Irish market appears to be dominated by a handful of life insurance companies that offer 'wrapped' Multi Asset Funds. This means they offer a basket of stocks, bonds, property etc., all within one investment.

Irish Life's MAPs 4 multi-asset fund states a standard annual management charge of 1.15%. A bit on the higher side for my liking, but this is still manageable.

But when you dig a little deeper, the KID documents (where all fees have to be fully disclosed as part of UCITS regulations) show the fee as 2.2%.

Double the quoted price

As an added bonus, they lock your money up for seven years, where an early encashment charge is waiting for those who wish to withdraw their money early. That's right, they charge YOU for making your money inaccessible.

This lock-up period is a shrewd business tactic. An exit charge is an excellent way to ensure customers don't leave when they realise how poor the performance is.

Too late, you're trapped.

Performance

Fees become more digestible provided the performance is strong, but unfortunately, the misery continues.

The Irish Life MAPS 4 Portfolio has an annual return of 1.63% a year over the last five years. Granted, this was a challenging market climate to navigate, but falling below even the lowest expectations of inflation means that this fund has returned negative real returns after inflation over the last five years.

A similar 60/40 portfolio made up of passive index funds (S&P 500 and US T bonds) would have returned roughly 6.5% a year over the same period for a fee of roughly 0.1%.

We can go round and round in circles regarding the 'risk adjusted' approach and the added 'diversification' of the multi-asset fund versus the 60/40 portfolio I have shown. But the reality is much of this so-called diversification is over-engineering for an extra cost for many long term investors.

So, how can such pathetic offerings still exist in a system where low-cost operators such as De Giro are providing endless ETF options and commission-free trades that provide access to market returns at a fraction of the price?

Two reasons spring to mind

Firstly, the Irish retail investment scene is built on a financial broker commission system where unsuspecting customers are shoved into these products by 'financial planners' who receive kickbacks and commissions from these investment companies. You think you're getting free investment advice; believe me, you're not.

Second, the tax treatment of ETF structures is comical in Ireland, and US ETFs aren't even an investment option. A 41% exit tax and an eight-year deemed disposal rule leaves investors stuck between a rock and a hard place.

Choose an overpriced, underperforming product that locks your money away for multiple years or choose the cheaper, better-performing product and suffer the tax consequences.

Bizarrely, investors are forced to make decisions based on preferential tax treatment rather than on the underlying investment's merits.

I have gone into much more detail on the tax treatment and investment options in Ireland on my website. Just scan the QR code.

If you would like me to independently review your investment portfolio, just send me an email at mike@theislandinvestor.com.

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Coolick National School to launch online lotto

A popular primary school in the Killarney area is launching a new fundraising initiative this week to support and improve the education experience of the children it serves. The Coolick […]

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A popular primary school in the Killarney area is launching a new fundraising initiative this week to support and improve the education experience of the children it serves.

The Coolick National School Lotto is now live; offering a weekly prize, a weekly jackpot and a range of valuable spot prizes at launch.

Coolick NS first opened its doors in 1870 making it one of the county’s oldest primary schools. The school and pre-school is home to over 130 children from the locality. This is an increase of 20% over the past 5 years taking enrolment to an all-time high.

Coolick NS School Lotto Chairperson and parent, Pádraig Leane says properly resourcing primary school services is crucial:

“The cost of providing education is rising and the school grants provided by the department, although valuable, only do so much. We want to overcome this challenge with our school lotto. The school has a range of immediate needs but also longer-term goals to expand our facilities, add more sports equipment, wellness programmes, student support programmes and increase extra-curricular trips,” he said.

First on the list is a new set of school jerseys, gymnastics mats, replacement of end-of-lfe iPads and further expansion of their Tír na nÓg play area for the younger pupils.
Coolick National School Principal Gearoid O’Sullivan remains focused on providing the best for the children of Coolick.

“As a school we are committed to providing the best equipment, teaching and learning resources, outdoor spaces and a school interior that helps nurture each child. This school lotto will help us with our commitment to provide the very best for the school and especially for the pupils in our care,” said the principal.

The staff and students of Coolick National School are appealing to families, friends, past pupils, members of the local community, stakeholders and supporters to get behind the weekly school lotto. It is hoped that the option of 1 line for €2.50, 2 lines for €4 or 3 lines for €5 will encourage everybody to contribute. A lotto draw will take place each week with a maximum jackpot of €2,000 to be won.

Signing up is easy; through the school’s website https://www.ourfundraiser.ie/org/coolickns

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Live TV audience date with Daniel O’Donnell at INEC

People of Killarney will have the opportunity to participate in a live television audience with Daniel O’Donnell. TG4 television’s highest rating country music series of concerts is coming to the […]

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People of Killarney will have the opportunity to participate in a live television audience with Daniel O’Donnell.

TG4 television’s highest rating country music series of concerts is coming to the Gleneagle INEC Arena for the first time from June 17 to 19.

Recorded before a live audience over three nights with two concerts per night, Opry le Daniel offers a different music theme each evening and a host of special guests will join the legendary presenter Daniel O’ Donnell on stage to perform all your favourite songs.

The recordings of the show will be split into two one-hour blocks, taking place throughout each evening.

Now in its 14th year, Ireland’s favourite country music artist O’ Donnell will be joined on stage by Declan Nerney, Cliona Hagan, Mike Denver, Chrissy Mac, Dana and the Donegal balladeers ‘Onóir’ to mention but a few.

Tickets from €30.20 are available from www.inec.ie and the Gleneagle INEC Arena box office on 064 6671555.

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