Death, taxes, and costs: The biggest performance drags on Asian portfolios
12 Jun 15
Brad McCosker, head of client portfolio management at First Degree Global Asset Management, looks at the seven biggest drags on Asian investment portfolios.
The negative effect of both costs and taxes on investment returns is substantial. Therefore, they should be minimised.
As indicated on the graph, were costs to be 4.5% per annum, a $1,000,000 investment would grow to a measly $1,716,638, for a gain over 25 years of just $716,638. Those costs mean a reduction in the market performance of the portfolio by a whopping $3,710,795, with costs paid out totalling $1,579,228 and performance foregone as a result of those costs being paid out totalling $2,131,567.
Some might ask how one could possibly pay 4.5% in costs. Well, it is not very hard to find products with that level of fees and there are probably many expats in Singapore who are paying those princely sums now. For some products on the market, these are actually conservative fee levels.
