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  • FIRST POST
    • Gas1883
    • By Gas1883 27th Jan 16, 11:49 PM
    • 2Posts
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    Gas1883
    Shenton Asset Backed Fund
    • #1
    • 27th Jan 16, 11:49 PM
    Shenton Asset Backed Fund 27th Jan 16 at 11:49 PM
    Hi forum,

    Long user of MSE but first time for me to post on the forum here.

    I am posting to get the thoughts of people with some experience in investing outside of standard savings accounts/cash ISAs/fixed term accounts etc.

    Today I read about Shenton's 9% 2 year Asset Backed Bond, I can't post a link as this is my first post on here, but it was in the paper today (well Daily Mirror website) and you can google it.

    What is the level of risk with this kind of product?
    Steer clear or more likely a safe bet?

    I had a read of their website etc but couldn't find much out elsewhere, and frankly I am not familiar with anything other than the usual fully covered savings products out there.

    I am looking for put a £15-20000 somewhere, and want to avoid the painfully low paying instant access savings accounts out there. The Shenton product above is for 2 years, I could do that comfortably at that rate (9%).

    However if I don't apply to them I am probably only able to open up a paragon account for 1 year or there 120 day notice account. Help to buy ISA is already open.

    Thanks for reading folks
Page 1
    • dunstonh
    • By dunstonh 28th Jan 16, 12:17 AM
    • 85,151 Posts
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    dunstonh
    • #2
    • 28th Jan 16, 12:17 AM
    • #2
    • 28th Jan 16, 12:17 AM
    What is the level of risk with this kind of product?
    100% loss potential with no FSCS protection. Illiquid. High risk. Whilst the money is secured against property, that is no guarantee of loss not occuring. Just ask any failed property "tycoon".

    The yield tends to reflect the risk (crude but generally reliable guide). With base rates so low, why do they need to set the yield at 9% to attract money?
    Last edited by dunstonh; 28-01-2016 at 12:07 PM. Reason: missing word
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Gas1883
    • By Gas1883 28th Jan 16, 1:23 AM
    • 2 Posts
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    Gas1883
    • #3
    • 28th Jan 16, 1:23 AM
    • #3
    • 28th Jan 16, 1:23 AM
    100% loss potential with no FSCS protection. Illiquid. High risk. Whilst the money is secured against property, that is no guarantee of loss. Just ask any failed property "tycoon".

    The yield tends to reflect the risk (crude but generally reliable guide). With base rates so low, why do they need to set the yield at 9% to attract money?
    Originally posted by dunstonh
    Thanks for the reply.
    It does have a too good to be true feel to it.
    • jimjames
    • By jimjames 28th Jan 16, 7:25 AM
    • 10,851 Posts
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    jimjames
    • #4
    • 28th Jan 16, 7:25 AM
    • #4
    • 28th Jan 16, 7:25 AM
    Thanks for the reply.
    It does have a too good to be true feel to it.
    Originally posted by Gas1883
    Yes. You've got less risk if you invest the money in the stock market
    Remember the saying: if it looks too good to be true it almost certainly is.
    • bowlhead99
    • By bowlhead99 28th Jan 16, 7:30 AM
    • 5,149 Posts
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    bowlhead99
    • #5
    • 28th Jan 16, 7:30 AM
    • #5
    • 28th Jan 16, 7:30 AM
    Thanks for the reply.
    It does have a too good to be true feel to it.
    Originally posted by Gas1883
    There are some investment options with high offered returns that are too good to realistically be true: they are scams.

    Also, there are some investment options with high offered returns that are completely true and genuine offers but carry high risk. The people that take your money do genuinely invest the money in things which they expect will make them money, and fully intend to repay the loan to you with all the agreed interest, and are not being disingenuous when they say that if they don't have enough money to pay you back, they'll give you potentially-valuable assets, or this other company over here which hopefully will have some valuable assets, has agreed to pay up instead of them.

    Their earnest belief that the deal for you to invest is a win-win - because you get interest and they get to use a pile of your cash for their money-making investment opportunity in exchange for a known fixed interest rate... may be commendable and sound great. But none of that means you couldn't lose all your money.

    I haven't looked up this deal to see what type it is, but dunstons comments are spot on.
    Last edited by bowlhead99; 28-01-2016 at 7:45 AM. Reason: typos
    • masonic
    • By masonic 28th Jan 16, 7:51 AM
    • 8,431 Posts
    • 5,417 Thanks
    masonic
    • #6
    • 28th Jan 16, 7:51 AM
    • #6
    • 28th Jan 16, 7:51 AM
    This seems to be secured on northern Brazilian property developments. Since you don't have any control or visibility of the security, there is no way to judge the risk levels involved. If they are valuing the security based on the anticipated sale price of the completed development, then clearly an abandoned building site half-way through the project will be worth a fraction of that price.

    How good is your knowledge of the Brazilian property market?
    • bowlhead99
    • By bowlhead99 28th Jan 16, 8:25 AM
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    bowlhead99
    • #7
    • 28th Jan 16, 8:25 AM
    • #7
    • 28th Jan 16, 8:25 AM
    You said that if you don't do this deal probably the best alternative for you is the paragon products (which pay about 2%).

    As you mentioned being a long time user of the site, I guess you know of the Santander 123 account which would pay 3% on 15-20k, or the various other high interest current accounts that pay more than that but with smaller maximum balances? If so and you're down to only the 2% products left, then really you have exhausted the risk free options.

    You can probably get more than 2% for two years by investing through mainstream peer-to-peer lending sites (though the money would start to be returned to you each month and you'd have to keep redeploying it), but that is not without risk either.

    If you're using a help to buy ISA then it sounds like saving for a house deposit over the next few years is your goal - so if you don't want the risk of having to defer that goal significantly, then best to stay away from the things that could go wrong. Which means all the things that ostensibly offer nice returns

    I have some investment funds that produce income and some bonds and preference shares in individual companies that are yielding 6% or more. But couldn't recommend them to you because they could halve in value if things go wrong and presumably you don't want to lose half your £20k while saving for a house...
    • Malthusian
    • By Malthusian 28th Jan 16, 10:02 AM
    • 1,196 Posts
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    Malthusian
    • #8
    • 28th Jan 16, 10:02 AM
    • #8
    • 28th Jan 16, 10:02 AM
    The Mirror article is shocking, even by the low standards of journalists peddling junk minibonds. It does everything it can short of outright illegality to imply that this is just like a cash deposit bond. The closest you get to being warned that you could lose 100% of the capital forever is "The bond is "asset-backed" - so there is some protection - but that doesn't mean it's as safe as in a normal savings account where the first £75,000 is guaranteed." (And a link to an older article about mini-bonds, which no-one will click.)

    "That doesn't mean it's as safe" to me means "It could be as safe, it could be slightly less safe", not "ultra-high-risk not remotely safe at all". And I don't read the Mirror.

    Why do they flog this utter exclamation marks? What does the Mirror get out of it? How do they get away with it?
    • bowlhead99
    • By bowlhead99 28th Jan 16, 11:37 AM
    • 5,149 Posts
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    bowlhead99
    • #9
    • 28th Jan 16, 11:37 AM
    • #9
    • 28th Jan 16, 11:37 AM
    The Mirror article is shocking, even by the low standards of journalists peddling junk minibonds. It does everything it can short of outright illegality to imply that this is just like a cash deposit bond.
    Originally posted by Malthusian
    Why do they flog this utter exclamation marks? What does the Mirror get out of it? How do they get away with it?
    If you read the whole article, including the conclusion:
    "Is it worth it?

    There's a clear trade off here – between a lot more interest than a standard savings account and greater risk to your money"

    and you also read the link in the middle "read more: what you need to know before lending money to a company" which is not a badly written piece... Then overall you should probably appreciate that it is not a risk free option. One of the clues to put you on alert that it is not a cash deposit bond was in the article's own headline (the last four words of the headline are, "but what's the catch?")

    So, someone with an IQ in triple digits and their eyes open s not necessarily going to get screwed. However, with no disrespect to Mirror readers, the readership is not famous for being the most educated or financially savvy, which is why they shouldn't really have unregulated schemes pimped out to them.

    The most deficient part was really their " the catch " section - where they basically just said the money wasn't a bank deposit and wasn't instant access -
    If you hold them for the full 2 years, you'll get your full cash back plus interest, but if you need to get the money back before then you need to "show financial hardship" or "if an executor of their estate makes a formal request".
    Clearly the real catch is that it is risky and they should have only said "if you hold them for the full 2 years, you'll *hopefully* get your full cash back plus interest".

    Where all the mirror readers are in danger of being caught out is that " the catch " doesn't sound bad if they're happy to be without the money for the full two years. The real danger, that YOUR CAPITAL IS AT RISK is only sneaked into the concluding section - by which point, some readers will already be salivating and thinking "great, where do I sign!"
    Last edited by bowlhead99; 28-01-2016 at 11:51 AM.
    • dunstonh
    • By dunstonh 28th Jan 16, 12:13 PM
    • 85,151 Posts
    • 50,164 Thanks
    dunstonh
    This is an investment. It isnt a retail product. it is like buying a single bond or a single company share.

    However, we have seen many media articles compare these 100% loss potential investments with guaranteed cash deposits. Some of these investments are also marketed in a way to make them sound as close to a fixed term deposit as they can get away with.

    The investment itself, probably wont go wrong. However, unless its a scam, then no investment company goes into these things expecting for things to go wrong. But some do. And in most cases, the investments that go wrong are the unregulated investments. This is an unregulated investment.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • PotentialEnergy
    • By PotentialEnergy 6th Mar 16, 3:45 PM
    • 50 Posts
    • 13 Thanks
    PotentialEnergy
    Be very, very, very cautious and trebly thorough if you seriously want to even consider these bonds. Bear in mind, the state of the Brazilian economy where previous governments are being investigated for corruption. The Real is tumbling on the currency markets as the Brazilian economy slumps. Will property values hold up and even if they did, they'll be worth far less in Sterling terms if the Real continues to fall.

    In 2013 IPM sold 'Secured Energy Bonds' offering 6.5% interest. Investors thought the 7.4ish million would be secured against the planned 22 solar installations and the Feed-in-Tariff income would provide the returns. The secured turned out to mean nothing including IPM's role as a Trustee Director. All they did was tell investors in effect "Oh, we're closing the stable door now the horse has bolted". The Director of the Australian firm CBD Energy(Now on the run) transferred over 4.5million to his company; which at the time of selling these bonds was failing to meet interest payments on business loans according to its accounts. There are numerous articles by journalists in the FT, Guardian etc who give a detailed lowdown. One fact that stood out was that 20% of the sum i.e. £1.5million disappeared immediately presumably paying launch costs and commission. Wide berth is the phrase that comes to mind.

    If you go to the bottom of the article as per address below, you'll see the remark 'off the richter scale' Why were IPM (Independent Portfolio Managers) even offering these bonds one asks.

    3 ws .room151.co.uk/treasury/solar-bonds-the-sunny-side-of-alternative-investments/
    Last edited by PotentialEnergy; 06-03-2016 at 4:03 PM. Reason: Supplementary info
    • PotentialEnergy
    • By PotentialEnergy 10th Sep 16, 9:29 PM
    • 50 Posts
    • 13 Thanks
    PotentialEnergy
    Just to alert you that the Shenton Bond has re-appeared in The Daily Telegraph today and London Property Bond appeared last weekend.

    https: //www.shentonbonds.com/our-partners/

    This time, the Partners are numerous but include ShakespeareMartineau as Legal Adviser. It seems this limited liability partnership(LLP) was set up in December 2015.
    This Url links a Julian Alister Turnbull as an officer of Macrae Secretaries
    https: //beta.companieshouse.gov.uk/officers/IGJfx-KhSYHY2SN-18FlvCHTUio/appointments
    This Url shows many companies Julian Alister Turnbull is an officer of
    https: //companycheck.co.uk/director/914120379/JULIAN-ALISTER-TURNBULL/companies

    This link shows companies for which Macrae Secretaries is an officer.
    https: //beta.companieshouse.gov.uk/officers/u2XfBpsEPhZHooccvWzezG3Od9I/appointments

    These include Secured Energy Bonds and Providence Bonds. Both are in administration and investors have probably lost over £15million a sizeable slice of which went to firms like IPM. According to an article published in the Financial Times, 20% of the money raised for Secured Energy Bonds disappeared in upfront costs. Juicy commission for some.

    If you see London Property Minibonds I suggest you ignore/bin the invitation too.
    https: //beta.companieshouse.gov.uk/company/08264794
    STOA FINANCIAL LIMITED (08264794)
    Correspondence address
    Shakespeare Martineau Llp, One America Square, Crosswall, London, England, EC3N 2SG
    https: //beta.companieshouse.gov.uk/company/08264794/officers
    Stoa Financial has 2 officers, one is Macrae Secretaries. The other is Christopher John Day who is also a director of IPM who sold the Secured Energy Bonds and Providence Bonds.

    All the above are facts courtesy of companies house. You draw your own conclusion whether you feel the due diligence to be expected by someone 'FCA authorised' will have been done on Shenton/London Property in light of previous minibonds.
    You do your OWN homework
    Last edited by PotentialEnergy; 10-09-2016 at 9:33 PM. Reason: clarification
    • AnotherJoe
    • By AnotherJoe 10th Sep 16, 9:35 PM
    • 4,212 Posts
    • 4,230 Thanks
    AnotherJoe
    Thanks for the heads up. Unfortunately I fear the most times it will be accessed is by some mug in a couple of years time when all their money has disappeared and they are googling to find where it went.
    • PotentialEnergy
    • By PotentialEnergy 24th Sep 16, 3:35 PM
    • 50 Posts
    • 13 Thanks
    PotentialEnergy
    Sop by IPM
    It has come to light that IPM made a concession to the FCA that they would no longer approve any minibond prospectuses. What we can bet is by that time AJ Turnbull had set up Shakespeare Martineau[Dec 15] and Christopher Day[Director of IPM] had set up Stoa Financial[Apr 16 by renaming Solone limited] which is part of the web of companies handling the London Property Bond launch.

    So, the same people involved in selling Secured Energy Bonds and Providence Bonds - both of which are probably going to lose the Minibond holders most of their capital - are involved in the process of selling/administering London Property Bonds and Shenton Bonds. In the SEB case, the Australian executive of CBD Energy transferred(stole) well over £4million from the so-called Secured fund.
    Beware is the word
    • bigfreddiel
    • By bigfreddiel 24th Sep 16, 8:32 PM
    • 4,071 Posts
    • 1,866 Thanks
    bigfreddiel
    Anything that says the return is 8% guaranteed is to be wary of.

    Even 5% should be approached with caution.

    Cheers fj
    • garycardinal
    • By garycardinal 17th Oct 16, 6:50 PM
    • 1 Posts
    • 0 Thanks
    garycardinal
    Total shambles
    Some information for you:

    - there's one direct employee of Shenton based permanently in the UK and he's only been with the company for a few months
    - the managing director is holding back on refunds, clearly hoping that the above mentioned employee will convince them to change their mind - appalling customer service, if you ask me
    - there seems to be only one person running their 'helpdesk', albeit a very competent lady who also seems to have been with the company for only a few months
    - they haven't even raised 1 million from this one
    - the managing director for Shenton is the 'former' sales director for the Brazil-based property developer they'll be invested in - coincidence?
    - there is something dodgy going on with the addresses, here - Gracechurch Street is listed on Companies House, but their forms need to be sent to an address on Queen Anne Street

    Avoid at all costs. Just avoid.
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