Too good to be true? Or maybe it is for real?

tjerome

Has anyone come across gmoinvestmentmanagment.com? I ask because they seem to have a deal that is too good to be true. They seem to be an investment yet they're offering a guaranteed 3.95% interest rate (on their Income Deposit Plan), they state that capital is fully protected and they say that your funds are protected by the FSCS up to £85,000. I've yet to come across any investment that is "fully protected" and I've also yet to come across any savings type account offering anywhere near 3.95%. Add to that that they're offering £100 for anyone signing up this month (which if you were to put in £10,000 gives you an immediate 1% for the year) and why wouldn't we all be rushing to sign up? Can someone please point out to me what I'm missing. There must be a catch!

jimjames

I haven't looked at that but you are right to be skeptical. There are bank accounts that pay up to 5% but on limited amounts of money.

Unknown companies generally offering unrealistic returns means you can lose all your money and guarantees are often meaningless.

seacaitch

Grantham, Mayo, Van Otterloo is a very large Boston, US-based investment firm founded in the 70s by Jeremy Grantham and his partners, and now manages over $100Billion in assets. Better known as GMO, Grantham is known for his analysis of market bubbles. It's website is here:
https://www.gmo.com/

And you can read about Jeremy Grantham here:
https://en.wikipedia.org/wiki/Jeremy_Grantham

Jeremy Grantham and GMO's Head of Asset Allocation, Ben Inker, jointly pen a very widely followed quarterly newsletter, links to which you can find on GMO's website. You can see Ben Inker's picture and bio on this page of GMO's board of directors if you scroll it down a little:
https://www.gmo.com/north-america/about/people/people-by-department/board-of-directors

Now, it appears that the outfit you've linked to have taken GMO's good name and appended 'investmentmanagement' on the end of it to form their own website name.

I hope someone has a quiet word in Jeremy Grantham's ear, over at GMO in Boston, because according to the following page on the website you linked to, his Head of Asset Allocation and board director, Ben Inker, is apparently moonlighting for this other outfit, where he appears to be manning the phones. See this link:
https://gmoinvestmentmanagement.com/regular-savings-plan/

It's quite a surprise to see someone of Ben Inker's calibre take on a call centre roll in a foreign country, but maybe he needs the money? Jeremy Grantham is a Yorkshireman, after all, so maybe Ben's boss at the Boston, US-based GMO just isn't paying him enough?!

alanq

tjerome wrote: »

Has anyone come across gmoinvestmentmanagment.com?

I assume that is meant to be gmoinvestmentmanagement.com

An Irish company with that name was registered with the FCA in January 2017 to allow it to operate in the UK.
https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000003ejXqkAAE

Domain registered just over a month ago.
https://www.whois.com/whois/gmoinvestmentmanagement.com

Non-UK banks passported to operate in the UK (e.g. RCI) are covered by the home country's compensation scheme. Deposits with UK subsidiaries of non-UK companies are covered by FSCS - e.g. Bank Of Ireland (UK) plc.

So I don't understand how what seems to be an investment with an Irish company would be covered by FSCS up to £85,000.

badger09

FAQs make interesting reading:cool:

CAPITAL PROTECTION
Working within the parameters set by the FSCS (Financial Services Compensation Scheme) all deposits are covered, capital is also covered by the Capital Guarantee Fund, a deposit plan in which the depositor’s principal is protected from losses. With a capital guarantee fund, any losses experienced are absorbed by the fund company, which tends to invest the majority of fund capital in very conservative securities to help minimise any risk. A fund will require that any individual remain invested for a set period as many of the underlying securities are bonds that need time to reach maturity and, subsequently, repay principal. The return on these funds can be higher than a savings account or money market returns. Fund managers, in order to minimise the fund’s risk of absorbing losses, will keep the majority of underlying assets conservative in vehicles such as bonds. A guaranteed bond can be municipal or corporate, backed by a bond insurer, a fund or group entity, or a government authority. A guaranteed bond removes this risk by creating a back-up payer in the event that the fund is unable to fulfill its obligation.

SECURITY OF THE DEPOSITED CAPITAL
Funds and Forex companies are at the extreme end of investing parameters as they look always for positive returns, regardless of the performance of any sector benchmark. A Hedge Fund indulges in more aggressive strategies and positions. This activeness of hedge funds explains their popularity. The performance historically outperforms other investment vehicles because they hold short positions and hedges. The total return targets of Hedge Funds vary, but a goal may be outlined as something like 10-19% yearly, regardless of the market conditions. Investors, however, need to understand that the Hedge Funds promise of pursuing positive returns means that they limit the number of depositors and require them to be fully accredited. Hedge Funds are prohibited from soliciting or advertising for business, a key factor that lends to their exclusiveness. They may from time to time however offer the novice investor opportunities by means of a cash deposit to cover their general monthly running costs. They in turn will offer the depositor a guaranteed return on investment usually between 3-6% depending on the deposit period. In funds, liquidity is a key concern for depositors. Liquidity provisions vary, but invested funds may be difficult to withdraw without prior notice. Many funds have a minimum investment period of 12 Months, which is an initial term during which investors cannot remove their capital.

Anyone want to share my bargepole?

Motormad

So no meaningful guarantee then!

ColdIron

There never is

masonic

With the frequency this type of thing comes up, there's an argument for a 'Too good to be true?' subforum.

Flobberchops

"Working within the parameters set up by..." - that's a neat rhetorical trick. I'll have to remember that for future use.

As in, "I assure you, officer, I was working within the parameters set up by the Civil Aviation Authority, the fact I don't actually hold a pilot's licence doesn't necessarily imply my passengers were at risk..."

Anthorn

tjerome wrote: »

Has anyone come across gmoinvestmentmanagment.com? I ask because they seem to have a deal that is too good to be true. They seem to be an investment yet they're offering a guaranteed 3.95% interest rate (on their Income Deposit Plan), they state that capital is fully protected and they say that your funds are protected by the FSCS up to £85,000. I've yet to come across any investment that is "fully protected" and I've also yet to come across any savings type account offering anywhere near 3.95%. Add to that that they're offering £100 for anyone signing up this month (which if you were to put in £10,000 gives you an immediate 1% for the year) and why wouldn't we all be rushing to sign up? Can someone please point out to me what I'm missing. There must be a catch!

I'm not rushing to sign up because 3.95% is not too good to be true when I'm making 6.2% pa from my existing portfolio with Hargreaves Lansdown.

Pretty much simple though: They invest conservatively mostly in Bonds and the fund manager absorbs any losses. Anyone else invest in Gilts in the past when all portfolios had them?

It's very MSE to regard anything new as suspicious or even a scam with accusations posted without any proof at all. This thread is typical of that. Probably lucky that MSE cannot be sued for the personal opinions expressed in its forum.

masonic

Anthorn wrote: »

I'm not rushing to sign up because 3.95% is not too good to be true when I'm making 6.2% pa from my existing portfolio with Hargreaves Lansdown.

I very much doubt Hargreaves Lansdown has made you any assurances about your capital and/or returns being guaranteed.

It's very MSE to regard anything new as suspicious or even a scam with accusations posted without any proof at all. This thread is typical of that. Probably lucky that MSE cannot be sued for the personal opinions expressed in its forum.

The burden of proof is on the company making the financial promotion. It is they who are making misleading assertions about guarantees. We are just pointing out how ridiculous those assertions are. Reputable firms simply do no operate in this misleading manner.