Losing money invested in a trust

theabbot_2

Not sure if this is the right page but,,,
I have just had a trust desolved after two and a bit years of arguing. I cannot sleep with worry because a few years ago it lost money. I have a solicitor looking into it for me but I need answers.
Within the trust where four trustees. One was classed as a professional trustee and made all the financial decissions and then wrote to the others for signatures, after the deals were done. a few years ago it lost £600,000 and a couple of years later another, £300,000. The first i was told, "yes but it had done well before that" and the latter was never acknowledged. I never recieved full accounts as agreed from the solicitors and have been lied to constantly.

Do people know? If investments lose drastically, are they the responsabillity of the fund manager? I understand that I must have some protection but dont know what.

Please help me sleep, 5am is so boring.

gozomark

how big is the trust ?
how much did it make this year ?
what was the investment mandate for the trust ?

theabbot_2

1.3 million loss 600000 to 700000
900000 loss 300000 to 600000
attitude to risk low to medium
not exact figures obviously. I asked for it to be managed at a 1% charge by a stockbroker but he claimed him doing it on a bi anual basis was more cost effective.

I dont have figures for this year

gozomark

which were the years of the big losses, and do they take into account any withdrawals ?

yelf

The trustees are liable to the beneficaries for any losses due to negligence. But if its due to fund performance that cant be helped (all investments plummetted recently)

dunstonh

You mention the years of losses. What about the years of gains?

Stockmarkets fell around 45% over the last 2 years. Fixed interest sector fell 20-40% and property fell 50%. Since March the fixed interest sector has largely recovered its losses. Property has stopped falling and stockmarkets are up 30-40%.

Investments zig zag in value. Always have, always will. You cant take all the good years without having some bad in there as well and last year was pretty bad. These year is looking very good at the moment.

Do people know? If investments lose drastically, are they the responsabillity of the fund manager? I understand that I must have some protection but dont know what.

No. The FSA does not allow complaints about investment returns. It is impossible for anyone to know the future and investments will have bad years and good years. They do allow complaints about not matching investments to attitude to risk. However, the trustees didnt use an IFA but a stockbroker. So, whereas an IFA would have used funds and could have put fixed interest funds in there to lower the risk to match profile, you tend to find most stockbrokers will focus on shares and not have the same degree of downside protection.

We had a discretionary fund manager (the service you had) post on here a while back and the only operated three risk profiles and their lowest one was still 100% shares. That put its in the medium/high risk category on an IFA scale which will typically have 5-10 risk profiles (on a 10 scale it would be 7 or 8). So, its possible the service the trustees chose to buy was not suitable based on risk but thats a hard one to prove. A stockbroker's documentation and risk warnings would be based on investments of that level of risk.

I dont have figures for this year

You need to get them as March was the low point in the recent crisis but since then things of gone up big time and YTD you should be in surplus.

theabbot_2

I am talking about five years ago for the big loss. All paperwork they give me tells me that the investments grew. They clearly haven't.

opinions4u

theabbot wrote: »

I am talking about five years ago for the big loss.

Here's a linky to the performance of the FTSE100.

If you select the time period "all" you can see that this particular index fell from over 7,000 to less than 3,500 between the years 2000 and 2003.

While your investments may not have been directly tracking the index, it does give you a guide for investment returns generally.

All paperwork they give me tells me that the investments grew. They clearly haven't.

You need to time date the paperwork and see how it fits in with performance values.

You also need to make allowance for any management charges, fees etc together with withdrawals from the fund. Are the beneficiaries receiving an income?

Perhaps you should post the capital values at the end of each year from 2000 to 2008. That would help other posters underatand whether or not the losses are reasonable or not.

turbobob

It sounds a complicated situation. I would have thought the discretionary portfolio manager sent regular statements to someone (probably the trustees if not you). These would show the overall position of the investment at that point in time, i.e. what shares are held, number of shares, amount paid, current value and so on. Also they send out a contract note each time shares are bought or sold.

Its lost this five years ago or its lost that now is not enough information for you to go on. If you can understand where the losses were incurred that will be a start. E.g. perhaps they had a high weighting in bank shares which shed a huge amount of value in 2008? Someone will have this information.

There is one or two examples of complaints involving discretionary management looked at by the Ombudsman - http://www.financial-ombudsman.org.uk/publications/ombudsman-news/67/67-case_studies_investment.html

It seems the ones that tend to be upheld are where consumers have been misled about the nature of the service they offer or the investments, or that they have acted outside what was agreed, e.g. a medium risk portfolio investing in speculative small company shares.

dunstonh

I am talking about five years ago for the big loss. All paperwork they give me tells me that the investments grew. They clearly haven't.

Between 2000-2002 there were some major drops on the stockmarket. However, the 3-5 years that followed were all growth years where it was pretty easy to double your money.

You cant just look at every negative period and complain about them and disregard all the positive periods. Investments will zig zag. Investments bought by stockbrokers under a discretionary managed service especially so (given the higher stockmarket content that is likely to exist).

What were the values each year for the whole period?
What withdrawals have been made in that period?
Is it a managed portfolio or did the "professional trustee" make the investment decisions?
If managed, is the professional trustee experienced with investments?