The Rich Play it Safe Now
July 22nd, 2008 by ALVIN SOONG
This is an extract and my summary from The Edge July 14. In my opinion, it is a reflection that the economy may not bounce back that fast, and we should still look into something safer and hedge against inflation:
In current bearish environment for equities and bonds, where inflation is surging, and global economy is slowing, many are flocking to cash instruments, capital-protected structured products, inflation protected bonds as well as absolute return orientated investments such as hedge funds.
The rich are now putting money where that would give them a level of comfort and credibility. They do not necessarily want high returns but they want their principal back at the end of the day. Hence now they are not interested in high risk structured products any more and are looking for capital protection plans. With inflaton and interestes rates creeping up, bonds would give low returns, but inflation protected bonds may still be in high demands.
For higher risk alternative investments, those that are popular are commodity linked products and hedge funds, but caution should be given that in this volatile asset class, one should have gone into commodities 2 yrs ago instead of now. However oil prices are still high and commodities though volatile need not be pulled back in near future.
The above is feedback from Sipko Schat, vice-chairman of Rabobank International and non-executive director of Dutch Bank’s international private bank operationsand my summary from full actual report by Kelvin Tan
