Last Friday I had an appointment with a foreign land investment agent. Below is my finding:
pro:
Term: suitable for Long term investor, typically over 5 years.
Liquidity - provide an option to high liquidity ratio investor for the objective of diversifying the risk in the region, and currency. It is recommended to those who can park their money from medium to long term.
CAGR - Profitable, Overall exited project (Weighted Average: 14.82% p.a., highest: 28.09% p.a., lowest: 4.68% p.a., Source: Audit rfom PwC dated April 20, 2010, http://www.
Regulation - Raided by BNM, but it is cleared now with minor compound paid. Exchange Act is applied all the time to prevent money laundry.
Selling mechanism: vote is cast by investors + Walton who generally holds 6-10% total value of the land. Land selling will be executed while the voting is more than 60%.
Psychology: you will never be haunted with price drop - because it has no price report periodically in short term.
Psychology: you will never be haunted with price drop - because it has no price report periodically in short term.
con:
Liquidity - not suitable for low liquidity investor especially for Malaysian who has a high debt servicing ratio in their personal cashflow.
CAGR - not helpful in increasing the portfolio CAGR if new investment has a same CAGR (14.82% p.a.) than my current portfolio CAGR (13.87% - 14.48% p.a over 6 years, 14 nos of investments). It is plenty of investments that can provide higher CAGR and liquidity
Risk - no calculated risk by the nature of its business - expected return and standard deviation can not be calculated through the daily price from the exchange because it has no daily, monthly or quarterly price.
Regulation - Exchange Act
Personal comment:
My investment philosophy: I am seeking for a CAGR>15%p.a. with the reasonable risk, means its sharpe ratio shall at least higher than 0.75. It will not be a helpful instrument even its fundamental characteristic is strong. In this land investment scenario, we have to ignore sharpe ratio.
Liquidity: I like liquidity. :)
CAGR: plenty of liquid investment has better CAGR/risk than this.
Risk measure: market risk and currency risk++.
Personal comment:
My investment philosophy: I am seeking for a CAGR>15%p.a. with the reasonable risk, means its sharpe ratio shall at least higher than 0.75. It will not be a helpful instrument even its fundamental characteristic is strong. In this land investment scenario, we have to ignore sharpe ratio.
Liquidity: I like liquidity. :)
CAGR: plenty of liquid investment has better CAGR/risk than this.
Risk measure: market risk and currency risk++.
