would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc.. 
Home
Everyone knows that investing involves a degree of risk. Even investments which are considered least risky, can sometimes be found shaky in changing circumstances. In September 2008, the 'A' rated Lehman Brothers collapsed, and those who held deposits and shares in Lehman Brothers lost heavily, exploding the myth about 'A' ratings! In the UK, the Royal Bank of Scotland was saved by the Government with a massive intervention, but not before investors lost badly. In August 2011, the US Government struggled desperately to pass legislation through Congress to enable them to increase their borrowing limits from September 1, 2011. If by some unfortunate political quirk, the US Congress was unable to pass the law to increase its borrowing beyond the then existing level,there was a very real possibility that the US Government would have defaulted on its debt of over $ 10 trillion!
It is in this immensely volatile and tension-packed environment that international reserve managers of the world function.
They have to safeguard their funds and at the same time deliver reasonable returns. The delivery of reasonable returns has become even more challenging, because many Western governments, including the US, UK and Germany have reduced their policy interest rates to almost zero, while Japan also has a near zero interest rate.
Therefore, investors have to diversify at least a small proportion of their funds to other types of investments, including securities of countries that yield good returns, but with a higher risk rating. Sri Lanka, as an emerging nation, has benefited from this investment stance of many international investors.
In fact, although Sri Lanka has a relatively low 'B1'sovereign rating from Moodys', that rating has not discouraged hundreds of foreign investors from investing $ 3,000m (Rs.400 b) in its international sovereign bonds, and about $ 2,500m (Rs 335 b) in its Government bills and bonds.
A total of about Rs.735 billion! Obviously, the higher returns yielded by the Sri Lankan securities would be an attraction in the global low interest environment. But, at the same time, a large majority of investors, when they take decisions to invest, will also consciously select a few lesser rated securities to allocate a small proportion of their total funds, to earn higher returns.
While such a diversification enables the Funds to spread their risk, the strategy also allows them to generate reasonable returns on the reserves under management. This type of investment strategy is now common all over the world among those who manage large funds and should be understood in that context, since the performance of a fund is evaluated on the total returns it generates to its members, while enhancing the long-term value of the Fund.
So far, from all available reports, there is no dispute that both the EPF fund managers and the international reserve managers of the Central Bank have been able to generate returns that are well above average.
They have also ensured the consistent growth of their respective funds and enhanced its value. On a dispassionate evaluation sans political rhetoric, it may even be said that the Central Bank fund managers have provided outstanding value to its stakeholders. There is irrefutable evidence to this fact when the results of the two funds are considered.
The EPF has provided returns well above the inflation rates and other long term fund rates,and consistently enhanced the value of the Fund.
The International Reserve Fund Managers have delivered gains of $ 430 m or approximately 6.6 percent on its average reserves, in 2011, which is above the Fed Fund average rate of just 0.25 percent in that year, while enhancing the value of the total reserve.
In these circumstances, the Central Bank must be given the space to take their investment decisions in an independent manner,as enjoyed by fund managers globally.
They must not be subjected to intense harassment, as being practised by some members of the local opposition. At a recent seminar, it was pointed out that the Central Bank has more than 500 of the best and the brightest brains in this country, including economists, IT specialists, lawyers, fund managers and accountants, in its cadre. From all accounts, these professionals are also continuously trained in relevant areas of operations of the Central Bank, at the best institutions in the world.
On that basis, these professionals must be held accountable for the delivery of the outcomes they are responsible for and not subjected to vituperative abuse on a transaction by transaction basis, with unsubstantiated accusations of mismanagement, corruption and fraud, to satisfy the political agendas and egos of a few politicians. Such attacks blatantly disregard the primary principles of portfolio investment, risk analysis, risk parameters and diversification policies.
Therefore, suspicions could be legitimately raised that those attacks may be designed to push the public service to a stage of "policy paralysis", in a manner similar to what is taking place in India's public service today. In that regard, it may perhaps also be worthwhile to investigate whether such suspicions have validity.
In the meantime, a new breed of so-called "investment experts" have also emerged who are today busy, dissecting the Central Bank's investments on a piece meal basis.
It is clear that they do not wish to recognise or understand the principles of "portfolio investment" practices. They are quick to attribute ulterior motives whenever a particular investment has not performed adequately at a particular time. But they are quiet when profits are realised in other transactions lead to over all profits and gains being made by the relevant Central Bank Fund Managers.
These 'experts' also conveniently ignore large unrealised gains in a bull market, but are vociferous whenever the portfolio carries unrealised losses in a bear market! This type of selective stance therefore casts serious doubts about their bonafides, and hopefully, a discerning public will soon see through the machinations of these "experts" and understand the motives behind these sinister exercises.
http://www.sundayobserver.lk/2012/07/22/fin38.asp
It is in this immensely volatile and tension-packed environment that international reserve managers of the world function.
They have to safeguard their funds and at the same time deliver reasonable returns. The delivery of reasonable returns has become even more challenging, because many Western governments, including the US, UK and Germany have reduced their policy interest rates to almost zero, while Japan also has a near zero interest rate.
Therefore, investors have to diversify at least a small proportion of their funds to other types of investments, including securities of countries that yield good returns, but with a higher risk rating. Sri Lanka, as an emerging nation, has benefited from this investment stance of many international investors.
In fact, although Sri Lanka has a relatively low 'B1'sovereign rating from Moodys', that rating has not discouraged hundreds of foreign investors from investing $ 3,000m (Rs.400 b) in its international sovereign bonds, and about $ 2,500m (Rs 335 b) in its Government bills and bonds.
A total of about Rs.735 billion! Obviously, the higher returns yielded by the Sri Lankan securities would be an attraction in the global low interest environment. But, at the same time, a large majority of investors, when they take decisions to invest, will also consciously select a few lesser rated securities to allocate a small proportion of their total funds, to earn higher returns.
While such a diversification enables the Funds to spread their risk, the strategy also allows them to generate reasonable returns on the reserves under management. This type of investment strategy is now common all over the world among those who manage large funds and should be understood in that context, since the performance of a fund is evaluated on the total returns it generates to its members, while enhancing the long-term value of the Fund.
So far, from all available reports, there is no dispute that both the EPF fund managers and the international reserve managers of the Central Bank have been able to generate returns that are well above average.
They have also ensured the consistent growth of their respective funds and enhanced its value. On a dispassionate evaluation sans political rhetoric, it may even be said that the Central Bank fund managers have provided outstanding value to its stakeholders. There is irrefutable evidence to this fact when the results of the two funds are considered.
The EPF has provided returns well above the inflation rates and other long term fund rates,and consistently enhanced the value of the Fund.
The International Reserve Fund Managers have delivered gains of $ 430 m or approximately 6.6 percent on its average reserves, in 2011, which is above the Fed Fund average rate of just 0.25 percent in that year, while enhancing the value of the total reserve.
In these circumstances, the Central Bank must be given the space to take their investment decisions in an independent manner,as enjoyed by fund managers globally.
They must not be subjected to intense harassment, as being practised by some members of the local opposition. At a recent seminar, it was pointed out that the Central Bank has more than 500 of the best and the brightest brains in this country, including economists, IT specialists, lawyers, fund managers and accountants, in its cadre. From all accounts, these professionals are also continuously trained in relevant areas of operations of the Central Bank, at the best institutions in the world.
On that basis, these professionals must be held accountable for the delivery of the outcomes they are responsible for and not subjected to vituperative abuse on a transaction by transaction basis, with unsubstantiated accusations of mismanagement, corruption and fraud, to satisfy the political agendas and egos of a few politicians. Such attacks blatantly disregard the primary principles of portfolio investment, risk analysis, risk parameters and diversification policies.
Therefore, suspicions could be legitimately raised that those attacks may be designed to push the public service to a stage of "policy paralysis", in a manner similar to what is taking place in India's public service today. In that regard, it may perhaps also be worthwhile to investigate whether such suspicions have validity.
In the meantime, a new breed of so-called "investment experts" have also emerged who are today busy, dissecting the Central Bank's investments on a piece meal basis.
It is clear that they do not wish to recognise or understand the principles of "portfolio investment" practices. They are quick to attribute ulterior motives whenever a particular investment has not performed adequately at a particular time. But they are quiet when profits are realised in other transactions lead to over all profits and gains being made by the relevant Central Bank Fund Managers.
These 'experts' also conveniently ignore large unrealised gains in a bull market, but are vociferous whenever the portfolio carries unrealised losses in a bear market! This type of selective stance therefore casts serious doubts about their bonafides, and hopefully, a discerning public will soon see through the machinations of these "experts" and understand the motives behind these sinister exercises.
http://www.sundayobserver.lk/2012/07/22/fin38.asp
