When to seek independent advice

I read with great interest your article of September 4 in which you compared three different capital protected funds. It was very refreshing that you did so as I, like many, simply tend to opt for products that I read about rather than seeking advice, as I simply do not know what else is available in the market place. How does one research and compare funds like you have done - is this available to the normal investor?

As technology has developed, especially via the Internet, one now has a huge exposure to investment research at one's fingertips. There are many Internet sites, for example, that offer free research tools for individual stocks, funds and bonds.

Many sites quote minute-by-minute stock prices, for example, with many sites not charging for the service either. While this information is very useful to the average investor, one should not rely entirely on this data to make an informed decision of what and where to invest in.

Few people truly have the time and knowledge to make an in-depth analysis of what to invest in, which is why most investors turn to an adviser.

There are two types of adviser. Firstly there is the 'tied' adviser, who recommends products from a single provider. For example, the company may recommend only one particular bank's products or ABC investment company's funds.

This is what you would expect from banks that have their own 'in-house' products to recommend. Certain banks also recommend other investment funds, typically from a short list of companies, such funds having been researched as being suitable by the bank's own advisers.

The other type of adviser is an independent adviser. As the name suggests, these firms are not restricted to one product provider or a short list. Instead, they tend to have a much wider choice of funds for their prospective clients to invest in.

Being independent means that the adviser does not exclusively recommend one product or investment company's fund range. Instead, they research from the entire fund universe and make recommendations accordingly.

This approach has been developed over many years where investors wish a wider choice and wish to use the expertise of an independent company to assist them with their investment decisions.

The term of independent adviser is also sometimes referred to as 'Multi-Manager'. This means that the adviser does not believe that one single investment company is 'best' at everything. For example, that company XYZ has the best European Fund, UK Fund, Global Bond Fund, etc., all at one time.

Instead, the adviser recommends what he deems to be the most appropriate fund(s) for the investor, regardless of the fund manager. Often therefore a client portfolio would consist of five or more different fund managers.

In summary, investors can research certain information via the Internet or investment publications. You can also subscribe to more sophisticated research sites, requiring payment.

Most people however look for advice and this can be done through many advisers and banks available. Investors can access a list of registered companies, authorised to provide investment advice in Malta through the MFSA Website: www.mfsa.com.mt .

Mark Hollingsworth is the director of Hollingsworth International Financial Services - licensed by the MFSA to provide investment services under the Investment Services Act 1994 (IS/32457). Address any financial questions to: Mark Hollingsworth, c/o The Sunday Times, PO Box 328, Valletta CMR 01. Alternatively, he can be contacted on 2131-6298/9984-2614 (office hours) or e-mail mh@hollingsworth-int.com.

Past performance is no guide to the future and, except where amounts are guaranteed, the price of your investments (and the currency in which it is denominated) may fall as well as rise. Your personal tax situation will depend on residence. Always consult a professional adviser. This article does not intend to give investment advice and its contents should not be construed as such. Readers are encouraged to seek professional advice on their personal financial situation.