International Wealth Accounts Ltd is a so called layer-player and it is not guaranteed that you can become a client directly with us. You might instead become a client through one of our partners who would handle administration and has all relevant permits. We target the international market and not any specific country. There are different rules that apply depending on the country where you live, your nationality, and what level of wealth you have acquired. Please send an email to firstname.lastname@example.org if you are interested to know more.
To achieve good returns with controlled risk, we follow these important points:
- ATTENTION TO THE MARKET – daily.
- INFORMATION – the latest and most reliable.
- SYSTEM – a long-term proven system for making profits.
- DIVERSIFICATION – between different assets, sectors and stocks.
- RISK MANAGEMENT – options to hedge against price falls.
- DISCIPLINE – clear investment rules, no emotions.
- TIMING – using market knowledge and a long experience.
We monitor the markets very closely in order to take advantage of the opportunities that from time to time always shows up. Long experience is important for knowing when and especially how to act. We are always focused on the level of risk, and avoid some investments if the customer has not explicitly specified a tolerance for higher risk.
We have great interest in the digital revolution because it creates major changes in many industries, which puts high pressure on already-established companies and rather easily opens things up for completely new players. We create well-diversified portfolios for customers to keep risk down, but our knowledge in the area of technology is one of the reasons for our big outperformance in 2015 when we achieved a return of the model portfolio of + 38.5% compared to the index of +2.2 %.
Since we specialize in financial markets, we follow the digitalization of the financial industry carefully to find the winners and especially to avoid companies that do not keep up with progress. This has also led to a start-up of an interesting project in the field of digital advice, the so-called “Robo-advisors”.
OUR LONG-TERM PORTFOLIOS
Besides the more equity-oriented model portfolio, we also build and monitor long-term portfolios in equity funds, Excanged Traded Funds (ETFs) and bond funds for some institutions that use these models to manage their customers’ long-term savings. The portfolios have three different risk profiles. Aggressive – Balanced – Cautious.
THE DIGITALIZATION OFFER GOOD INVESTMENT OPPORTUNITIES
In the selection of funds, we focus on industries that benefit from the rapid digital developments. The rapid digitalization of the financial world offer good opportunities for returns but also a risk for the banks that do not keep up with competition as more and more new players are cherry-picking the most profitable areas in banking.
CONTROLLED RISK IN A LOW INTEREST RATE WORLD
The unique situation of negative interest rates makes it challenging for us to achieve good returns without taking on too much risk. Examples of attractive funds are those which own shares in companies that own residential properties in growth regions and funds that invest in selected infrastructure projects, such as water management in areas where demand is high and the yield therefore stable. Since we have a unique knowledge and experience from Asia, it is a given part of a long-term portfolio, however we have to be selective as the situation varies greatly between countries. China is still one of our long-term favorite countries.
SELECTIVE OPPORTUNITIES IN CORPORATE BONDS
Low interest rates are a cause for concern and we must be alert to the bond funds that buy corporate bonds, so they are not too much involved in industries such as commodities, where companies are under pressure due to the large price falls in recent years. It is also important to be selective among funds that focus on bonds issued by financial institutions as that industry is changing rapidly, we therefore avoid bonds with too long maturities. There is a good range of ETFs (Exchange Traded Funds) which helps us to adjust the risk effectively at a low cost.
SELECTIVE SECTORS AND MARKETS
As for the shares we invest most in, they include consumer goods (staples), selected solid industrial companies, solid real estate companies (housing), new digital players in the financial industry, companies active in industrial rationalization and health care in areas of interest, such as diabetes. Demographic trends with an increasing proportion of elderly people in the Western world has made us invest in stocks that benefit from this trend, such as health care and elderly care.
The geographical diversification is spread over different continents with the United States as an important part, but also Europe if you choose the right companies. Asia is also interesting, especially consumer shares. From time to time we also invest to a smaller extent into a number of emerging countries, although we are very selective with South America and Africa. If you want to have exposure to these regions, there are large international companies to invest in, almost eliminating the country risk.
STABLE RETURN AND REDUCED RISK BY COVERED CALL STRATEGIES
In order to keep down the level of risk and stabilize the return, we use from time to time a strategy called Covered Calls. This is an attractive strategy for long-term management if used in the right way and you are a bit selective.
Covered call strategies are one of our main specialties, where we have extensive experience and a solid knowledge as a professional player, a former so-called market maker, on a number of different markets. It is a conservative strategy and a superb method to achieve stable returns at lower risk than a similar plain share portfolio.
In summary, the ups and downs are reduced in exchange for a more stable return. It is important to manage effectively, especially during times when the market is volatile. This is a tool in the management process that works well over longer periods, but should sometimes be avoided or reduced in order to achieve higher returns.
A covered call strategy always gives better returns than a similar plain equity portfolio, except when the market moves up fast, but also then you earn money up to a certain limit. A covered call strategy also earn money on a flat stock market and also on a slightly declining market. For larger declines there will however be a loss of money, although never as much as an equivalent share portfolio.
A SUCCESSFUL STRATEGY
One of our most successful, long-term strategies has been to create a portfolio where the base is a mix of a few chosen covered call funds, that sometimes is replaced by ordinary index funds when market conditions are favorable. Then we add in a number of ETFs (Exchange Traded Funds) that have stable and attractive shares in attractive sectors and markets. On top of this we spice up with some high-growth stocks that have a positive cash flow. This strategy has a limited overall risk but still reaches relatively high and stable returns.
For our individual assignments with High Net Worth Individuals and institutions, we are also involved in making covered call in a basket of individual stocks, but this requires much more coverage of the taken positions.
HOW WE MAKE MONEY ON COVERED CALLS
Covered call strategies have been around since options were introduced in the US in the 1970s. The strategy is used mainly by professionals such as insurance companies and sophisticated players. It looks easy in theory but in reality it is more complicated because it is a dynamic process that must be adjusted depending on a number of factors:
- We have to follow a chart of the stock price or index for signs of strength or weakness, such as volume, high and low of the stock and other indicators.
- We have to follow news and reports for specific stocks and major changes in the ownership of the shares, and also follow general economic and political news.
- We select the appropriate call option on the market based on how well we get paid (implicit standard deviation), the underlying share’s historical volatility, the option’s exercise price and the exercise month.
DEVELOPMENTS IN THE USE OF COVERED CALLS
Covered calls have over the years gradually become more popular, mainly in the US. A number of covered call funds have been introduced over the years, but often disappear rather quickly when they fail to obtain a good and steady return. One reason for the disappointing result is that they often have static rules so that they always have to sell options even during periods when the market is trending strongly (reducing much of the fund’s gain on the stock market), or when they get little paid for the options (low implied standard deviation).
Another problem is those covered call funds that want to be extremely conservative and buy shares in high-yelding stocks from utility companies that hardly move and thereby the options are extremely low-priced so the fund achieves a lousy income from the received option premium. If there is a one-time political event that generates a big move upward, they miss the whole increase of the stock price.
Nowadays there are covered call funds in various indexes that we can go into and out of, depending on our own opinion about the market and depending on how much premium the fund are getting paid for their sold options (implied volatility that continuously moves up and down). This way we can choose the periods when covered call is a useful tool in our asset management.
This is just a brief introduction to Covered calls, there are several other parameters to look into in order to achieve a stable return with controlled risk.
Please send an email to email@example.com if you are interested in discussing cooperation in asset management.