Small investors have never excited financial firms enough to target them as a group. They just don’t deliver the same margins as the business generated from large institutions and high net worth clients.
But boutique investment firm MoneyMasters Limited has decided to build products targeted at this underserved market – a segment in which it has some expertise due to the business it generates from the credit union movement.
The Claudette Crooks-led firm, which has been present but quiet in recent years, working mainly in the background doing project financing – one of its most recent deals being the structuring of $900 million of deferred shares for C&WJ Credit Union – has developed two pooled funds that are priced for the pocket of persons with small amounts to invest.
Investment in the Growth Fund, which is invested in bonds, startes at $60,000; and at US$100 in the Money Builder Fund, which is invested in US securities and denominated in US dollars. The units are priced respectively at $1 and US$1.
The MoneyMasters president says her outfit saw an opportunity for new business from simplified products targeting an investor class that is presented with few options.
“We are responding to what has happened on the domestic front, in that average T-bill rates have gone down to 3.5 per cent. If you take the tax out of that, you’re down to 1.5 per cent, and the need for professionally managed funds to give investors more,” said Crooks.
The company aims to raise the equivalent of US$20 million on the Growth Fund and US$10 million for the Money Builder Fund during an offer period that should have closed Monday, but was extended to today, September 28.
Crooks said Thursday that MoneyMasters had not yet tallied the uptake from the offers, due to its focus on the road shows that included stops in Montego Bay, Junction in St Elizabeth, Savanna-la-Mar, Mandeville, St Ann’s Bay and Kingston.
She said, however, that the funds were open-ended, which means persons can still join after the offer period closes.
The company is taking square aim at the small investor, whose savings are losing value daily, according to Vice-President of Business Development and Corporate Financing Dennis Hickey.
“There is the twofold recognition that if you put money on government paper, never mind a low inflation rate, you are effectively getting a negative rate of return …,” said Hickey. “The net effect is that deposits below, say a million dollars, have found their way into the banks earning nothing.”
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