Amicus Invest offers three unregulated offshore investment products:

• Amicus Bonus Cash Account: Pays 4% per year interest (3% on balances calculated daily and a further 1% “bonus” on balances calculated quarterly). Funds can be added and withdrawn at any time.
• Amicus Regular Savings Plan: Pays interest on monthly investments as follows: 6% for a 1 year term, 7% for a 2 year term, 8% for 3 years, 9% for 5 years and 10% for 10 years. Early withdrawals are permitted but forfeit all interest accrued.
• Amicus Single Investment Plan: Fixed term investments paying interest as follows:
  • 3 months – 4% per annum
  • 6 months – 5%pa
  • 1 year – 6.25%pa
  • 2 years and 3 years: “Guaranteed Total Return of 15.00% (equal to 7.25% pa.) and 26.00% (equal to 8.09% pa.)”
  • 5 years and 10 years: “Guaranteed Total Return of 45.00% (equal to 8.75% pa.) and 100.00% (equal to 9.50% pa.)” – these numbers don’t add up, as a 45% return over 5 years is 7.7% compounded, and a 100% return over 10 years is 7.1% compounded.

The discrepancy between the rates available on 5 and 10 years is not explained, nor is it explained why investors would want to receive a lower rate of return for locking their money away for longer.

Who are Amicus Invest?

No information is provided on the Amicus website as to who owns or controls the business.

Despite displaying an Austrian address on its website, Amicus Investment Ltd is registered in the Marshall Islands (a small country in the Pacific Ocean with a population of just over 50,000).

Pictures on the website which supposedly show Amicus Investment “advisors” are in reality stock photos.

The company was incorporated in 2011, redomiciled from the Bahamas to the Marshall Islands in 2013, and the amicusinvest.com website was registered in May 2013.

How safe is the investment?

These investments are unregulated corporate loans and if Amicus Investment defaults you risk losing up to 100% of your money.

Amicus claims that investors’ funds are invested into “a range of interest bearing instruments like consumer loan portfolios and corporate bond funds. The rest of our assets are invested into equities globally.”

Should Amicus fail to make sufficient returns from its consumer loans and other assets (e.g. due to a fall in the markets or defaults by its borrowers), there is a risk it may be unable to return investors’ money.

The use of terms like “Guaranteed” and “Cash Account” to describe loans with a risk of 100% capital loss is highly misleading from a regulatory perspective, and would not be permitted if Amicus was regulated in the EU or most other developed markets.

Should I invest with Amicus Investment?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering up to 8% per annum yields should be considered high risk. As an individual security with a risk of total and permanent loss, Amicus’ investments are higher risk than a mainstream diversified stockmarket fund.

Amicus Investment is regulated in the Marshall Islands and does not claim any other regulatory authorisation. This means its investments cannot legally be marketed to investors in the USA, the UK, the EU or other jurisdictions where you require authorisation from their own regulator to offer securities or financial promotions.

Amicus has already been subject to warnings from regulatory authorities in Austria and Belgium.

Under Amicus’ “Frequently Asked Question” section, one FAQ is as follows: “I read that the financial regulatory authority of a country has issued a warning about Amicus Investment. What does it mean?” Amicus rather brazenly replies: “Amicus Investment Ltd. is registered in the Marshall Islands. We offer our financial services to clients from all over the world, following the legislation of the Marshall Islands. Therefore, we are not bound by other countries’ financial authorities and such warnings have no effects on our business.”

The fact that Amicus is, according to its own website, “frequently asked questions” about these regulatory warnings should be enough to give investors pause.

HPB Assurance Limited offers a Holiday Property Bond in which investors invest at least £5,000 in a bond holding holiday properties and securities. The bond pays no yield; instead, investors have the right to stay in HPB’s properties for a “no profit user charge”, which would presumably be less than they would pay to a conventional holiday provider for an equivalent holiday.

While at times its literature urges prospective investors to “only consider it for its holiday benefits”, the bond is structured as a life assurance bond (aka an insurance bond) which invests in shares and holiday properties, and terms like “investors” and “bondholders” are used liberally in its literature.

If it looks like an investment, and quacks like an investment, and I have to put money in upfront in the hope of a return (cheaper holidays than I’d get elsewhere + an eventual surrender payment) like an investment, it’s an investment.

HPB Management Ltd has been in existence since 1981 and is fully regulated by the FCA. This puts it outside the scope of what I usually review on this blog, but the unusual nature of the investment, the fact that it’s advertised directly to the general public via the colour supplements and suchlike, and the fact that these bonds are largely ignored by the mainstream investment industry, was enough to pique my interest.

Who are HPB Management?

No details of who is behind the business are provided on the HPB website.

HPB Management Ltd is 100% owned by Quality Holidays Assured Limited, which is incorporated in the Isle of Man. UK Companies House filings reveal that Robert Boyce, James Boyce and Geoffrey Baber have significant control of the company.

How does the bond work?

Investors must make an initial investment of at least £5,000 in the bond (although they can take out a loan with a minimum £2,000 deposit in order to invest – see “Geared investment” below).

The larger the investment, the more “Holiday Points” an investor receives each year, which allows them to take more HPB holidays or stay in larger properties. To stay in one of HPB’s properties, the investor pays Holiday Points plus a “no profit user charge” which covers running and maintenance costs.

Investors are locked into the bond from 14 days after their first HPB holiday until two years after investment. After that the bond can be surrendered at any time. The amount that investors will receive back will be reduced by HPB’s charges (see “Charges” below) and will also depend on the fluctuating value of the properties and securities held by the bond. HPB can delay withdrawals for up to a year if necessary to avoid selling a holiday property at a disadvantageous price.

The yield of the bond is effectively the difference between what the investor pays to go on an HPB holiday and what they would pay to go on a conventional holiday. The capital value of the investment will fluctuate depending on the value of the properties and securities held by the bond.

If investors are unable to use their Holiday Points in a given year, they can elect to receive cash instead if they give notice to HPB before the start of the year. As of January 2018 the cash alternative is 1.25% of premiums paid.

Performance

Assessing the past performance of the bond in the way that we would a conventional investment is virtually impossible.

The yield of the investment is impossible to quantify because it depends on what holidays the investor wants to take and what they would pay to take those holidays from a conventional provider vs. HPB’s “no profit user charge”.

The capital performance can however be assessed by viewing the performance of the Holiday Property Bond Series 1 fund via marketsft.com (ISIN GB0004674346). Since 5 June 1988 (the furthest FT.com goes back) the capital value of the bonds has fallen 38%; if the units were originally issued for £1 each, the value of the bonds’ assets have fallen by 46% since inception in 1983.

HPB’s literature says that 60% of the fund is invested in holiday properties and the remaining 40% in a portfolio of securities. I was unable to find a more detailed breakdown of what the fund invests in.

The temptation for an investor is to

• ignore the bond’s surrender value on the grounds they are having nice holidays
• ignore the full price they are paying for their holidays on the grounds that eventually they (or their family) will get back the money they put into the bond.

This is a recipe for disappointment when they eventually cash in their bond. In reality:

• You cannot know whether the bond is performing as an investment without knowing how much more you would have paid to go on conventional holidays and adding this saving onto the surrender value.
• You cannot know whether HPB holidays are good value without adding the difference between what you can get out of the bond and what you would have had from a conventional investment to your “no profit user charges” (and quarterly fees).

Geared investment

As mentioned above, investors can apply for an interest-free loan of between £3,000 and £9,000 in order to invest in the bond (with a minimum deposit of £2,000).

Borrowing to invest is a high-risk activity which is typically only suitable for highly risk-seeking investors.

The worst case scenario is that the value of the HPB bond collapses, but the investor still owes money to whoever the lender is. (Who the lender is is not specified on hpb.co.uk, but HPB Management does not appear to have FCA authorisation to issue loans itself, which suggests the loans may be arranged with a third party.)

This means their losses can exceed the amount invested; e.g. if they borrow £3,000 to buy a £5,000 Holiday Property Bond and the shares fall by half, they have an investment worth £2,500 but have to pay back a £3,000 loan, leaving them with minus £500.

Charges

The charges are described in advertisements as 25% upfront and 2.5% per annum.

Compared to conventional life assurance bonds these charges verge on the outrageous (no initial charge and all-in annual costs of 0.5% – 1.25% are currently typical for a non-advised portfolio of funds). But these charges may turn out to be more reasonable if the investor can recover some of this 25% and 2.5% by paying less for an HPB holiday compared to a similar conventional holiday, along with getting a decent return from the capital value of the bond. Whether this is likely is, as is the rule with Holiday Property Bonds, difficult to determine.

HPB also has the right to apply an exit charge (a bid-offer spread) of up to 6%. As of January 2018 it is not applying a bid-offer spread and says it has no plans to do so.

The more I think about the 25% upfront charge, the less I like it. My initial reaction was that it’s a rip-off, compared with conventional investments. My second reaction was that it may be unfair to compare it with conventional investments, as conventional investments don’t pay you in cheaper holidays.

My third reaction is that I still don’t like it. There is no way that HPB incurs upfront administrative costs of 25%. A holiday taken by an investor with a brand-new bond costs HPB the same as a holiday taken by an investor of 20 years.  In theory the holiday should be paid for by the yield HPB makes from their investment, plus the “no profit user charge”.

Effectively new investors are subsidising old ones, with an investor who has taken enough holidays to recover the initial charge paying less for their annual holidays than a new investor. This cross-subsidy may have been acceptable in the 80s when heavily front-loaded charging structures were common, but is much less so in the post-2012 era.

Should I invest in a Holiday Property Bond?

As an investment, HPB is almost impossible to assess. As a holiday provider, HPB can only be recommended if you are so keen on staying in HPB’s properties, rather than those of its rivals, that you are prepared to shrug off any losses on the initial investment. A commonly seen argument by fans or representatives of Holiday Property Bonds is that the bond should not be viewed as an investment at all. My suggestion would be that if you don’t want to view it as an investment, then don’t invest.

The Holiday Property Bond clearly works best if you can hold on to it for a very long period – possibly for your lifetime – which renders the surrender value largely irrelevant, and also maximises your chance of recovering the eye-watering 25% initial charge. However, on the holiday side I question whether it is desirable to pay a large sum of money upfront and commit yourself to holidaying with a single provider for potentially your whole lifetime. In the AirBNB era I find this unattractive.

HPB describes their investment as “unique”, quite accurately. The fact that the product has been around for over 30 years and is still unique is a major question mark. When someone has a new investment idea that is profitable for all parties, it spreads across the markets like wildfire. For example, in 1975 John Bogle had an idea to launch a fund that did not exercise any judgment in what shares to invest in, while passing on the money saved on fund research and management to the investor via lower charges. 40 years on, you can’t move for index-tracking funds.

There is no copyright or patent on HPB’s product. If Holiday Property Bonds are a good investment and a good way to pay for a holiday, why are they still unique?

What are the alternatives?

Any diversified investment portfolio can be considered an alternative to Holiday Property Bonds, as investors can put the yield from their portfolio towards the cost of their annual holidays. No investments are guaranteed to make money, but a portfolio diversified across global mainstream stockmarkets is less likely to lose money in the long term in the way the Holiday Property Bonds Series 1 fund has since 2008, despite both world stockmarkets and commercial property indices having risen significantly in that time.

Like Holiday Property Bonds, conventional investments also pay a form of Holiday Points which can be exchanged for the right to stay in holiday properties around the world, but with a far greater choice of holidays; it’s called cash.

REWS (Renewable Energy Waste Solutions UK plc) is offering 2 year and 4 year bonds paying interest as follows:

• 2 year bonds: 8% if income is paid out twice a year, 9% if income is rolled up and paid out at the end, 10% paid out twice a year for investments over £100,000
• 4 year bonds: 10% if income is paid out twice a year, 11% if income is rolled up and paid out at the end, 12% paid out twice a year for investments over £100,000

Who are REWS?

Renewable Energy Waste Solutions UK plc was incorporated in February 2017 and is yet to file accounts. Companies House shows that Matthew Donegan owns 100% of the company as at September 2017.

Despite owning and controlling 100% of the company, Donegan describes himself extremely modestly as merely “Head Engineer” in the literature, responsible for “[overseeing] the project build process”, and is listed third of the directors.

The other directors are described as Dennis Ng, managing director of Hong-Kong based Epic Asset Management Ltd and Ingenious Investments (not to be confused with the similarly-named UK-regulated firm), Bill McClintock, ex Property Ombudsman chairman, and Ben Harris.

How safe is the investment?

These investments are unregulated corporate loans and if REWS defaults you risk losing up to 100% of your money.

The purpose of the bonds is to allow REWS to invest in waste-to-energy facilities.

If REWS fails to make sufficient returns from its waste-to-energy facilities, or for any other reason REWS runs out of money to service these bonds, there is a risk that they may default on payments of interest and capital to investors.

The literature refers to “UK Government backing”. This simply means that the UK Government is a potential customer. It does not mean the UK Government backs REWS as an investment in the same way as, for example, National Savings & Investments.

Asset-backed security

Investors have a first legal charge over the company’s assets.

Investors should not assume that because their loans are secured on these assets, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed loans have been known to lose 100% of their money (e.g. Providence Bonds and Secured Energy Bonds) when it turned out that the collateral was insufficient to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in REWS, only illustrating the risk that is inherent in unregulated corporate loan notes even when they are asset-backed.

If investors plan to rely on this security, it is essential that they undertake professional due diligence to ensure that in the event of a default, these securities are valuable and liquid enough to raise sufficient money to compensate all investors, as well as any other creditors that REWS has borrowed money from.

The literature does not reveal what assets REWS has and the company is yet to file accounts, so any investors who find this security attractive will need to ensure they have independent due diligence regarding how much the assets are likely to be worth.

Should I invest with REWS?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering up to 12% per annum yields should be considered very high risk. As an individual security with a risk of total and permanent loss, REWS’ bonds are higher risk than a mainstream diversified stockmarket fund.

This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that in the event of default, the security could be easily sold and would raise enough money to compensate all the investors, after the adminstrator deducts their fees and any higher-ranking borrowers are paid.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted, the sale of the security failed to raise enough money to compensate all investors, and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure the asset-backed security can be relied on?

Prime ISA (a trading name of Northern Provident Investments Limited) is offering unregulated investment in bonds issued by Prime ISA Bond Co 1 Limited.

The website primeisa.co.uk describes the offering as 7% per year after three years. The PDF brochure, however (available from the same website via “Download our free investor guide”) describes the offering as 6% per year over five years. It is unclear which is correct.

In addition, the brochure says “Invest £20,000 in Prime ISA, after 5 years you would receive a total of £26,034 Tax Free, equalling a return of 30.2%.” On a Compound Annual Growth Rate basis, this is a 5.4%pa return. This is despite the brochure saying earlier “What’s better is the Innovative Finance ISA compounds your interest…” under “6%” in a big font, which to my eyes implies that 6% should be compound and not simple interest.

Who is Prime ISA?

The small print at the bottom of the website states “When referring to ‘Prime’, we are referencing the bond issuer who is Prime ISA Bond Co 1 Limited. Registered in England and Wales, company number is 10952707…” However company 10952707 is Prime ISA Limited. Prime ISA Bond Co 1 Limited is company 11078851. There is also a Prime ISA Bond Co 2 Limited (11143964).

Both Prime ISA Bond Co 1 and 2 are 100% owned by Prime ISA Limited, which is in turn 100% owned by Daron Lee, one of the two directors.

Daron Lee previously founded the broker XCap Securities in 2010. He stepped down in late 2012.

Confusingly, Northern Provident Investments Limited is referred to by its trading name of Prime ISA, but is effectively separate to the Prime ISA 1 / 2 and holding companies. It is is 100% owned by Innovative Property Finance Limited according to its last confirmation statement. Innovative Property Finance Limited has since been renamed as Northern Provident Services Limited, and is 100% owned by Paul Crawford.

Northernprovidentinvestments.co.uk describes the role of Northern Provident as to “facilitate the financial promotion of marketing materials and the Information Memorandum by way of Section 21 FSMA sign off”.

Note that while Northern Provident and the production of financial promotions for Prime is regulated, the investment is not.

Paul Crawford is described on the website as a Diploma Qualified financial adviser, but should not be confused with the other financial adviser named Paul Crawford who ran Crawford Consulting. According to Companies House, Northern Provident’s Paul Crawford is 20 years younger than Crawford Consulting’s Paul Crawford.

According to the FCA register Northern Provident Investments Limited is also known as Just ISA, Northern Provident Investments, Property Vault ISA, Barbican ISA, Baribican ISA, Fyzz ISA, Prime ISA, Northern Provident Financial Limited, Simply ISA, Choices ISA, ISA Lab, and Money Labs Ltd.

For the rest of this article, “Prime” refers to the bond issuer and not Northern Provident.

How safe is the investment?

These investments are unregulated corporate loans and if the issuer (Prime ISA Bond Co 1) defaults you risk losing up to 100% of your money.

The purpose of the bonds is to allow Prime to renovate a data centre in Wythenshawe. Presumably, after the data centre is refurbished, it will be sold and the proceeds used to repay the bonds.

If Prime is unable to sell the data centre for enough money before repayment of capital and interest falls due, or for any other reason Prime runs out of money to service these bonds, there is a risk that they may default on payments of interest and capital to investors.

Asset-backed security

According to the literature, “the bond is secured against the assets of the Project Company. This will include the security it takes on the project it is financing.”

One would assume this would mean the data centre, but this is not actually explicitly stated in the literature. Nor does the literature state who or which company owns the data centre.

If investors plan to rely on this security, it is essential that they undertake professional due diligence to ensure that in the event of a default, this security is valuable and liquid enough to raise sufficient money to compensate all investors, as well as any other creditors that Prime has borrowed money from. The starting point is to check what the assets of Prime ISA Bond Co 1 actually are, and what security it has over the physical property of the data centre in its turn.

The literature goes on to say “Asset backing is a minimum of 125% of the professional valuation undertaken.” As written, this statement makes little sense. The asset-backing is 100% of whatever the valuation is. Perhaps they meant to say “Asset backing is a minimum of 125% of the amount borrowed, according to a professional valuation”.

Investors should not assume that because the bonds are asset-backed, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed loans have been known to lose 100% of their money (e.g. Providence Bonds and Secured Energy Bonds) when it turned out that the collateral was insufficient to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Prime, only illustrating the risk that is inherent in unregulated corporate loan notes even when they are asset-backed. Until they have determined exactly what the security assets of Prime are worth and exactly how much has been lent out, investors should still consider the risk of up to 100% loss.

Should I invest with Prime?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Investors will need to determine what the rate of return actually is (5.4%, 6% or 7%) before they can begin to assess whether it is worth taking the risk. Prime’s confusing literature is very unhelpful in this regard.

Prime’s literature claims that “While nothing is free of risk, the directors of Prime ISA, alongside the Project Company, will work extensively to achieve the minimum of risk.”

Regardless of what measures have been taken to reduce risk, as an individual security with a risk of total and permanent loss, Prime’s bonds are higher risk than a mainstream diversified stockmarket fund.

This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that in the event of default, the security could be easily sold and would raise enough money to compensate all the investors, after the adminstrator deducts their fees and any higher-ranking borrowers are paid.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted, the sale of the security failed to raise enough money to compensate all investors, and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for an investment with “the minimum of risk”, you should not invest in unregulated products with a risk of 100% capital loss.

EcoCrops International offers investment plots for sale in Estonian forestry at €8,200 for a 1 acre plot. The investment case is that after 3-5 years the plots will be harvested and the timber converted into wood pellets for biofuel.

EcoCrops International projects that after the plots are sold, investors will receive €11,280 from the sale of the pellets and €5,000 for the land. A 5% fee will be deducted, leaving the investor with €15,466. This is described as a 17.19%pa return, which suggests a 4 year investment timeframe. Elsewhere the literature states that EcoCrops targets a 3-5 year period before harvesting takes place.

These are however projections; according to the literature, a “conservative view” has been taken as to the valuation of the land on sale, while the price of the pellets is based on current prices.

Who are EcoCrops International?

No information is provided on the EcoCrops website as to who owns or controls the business.

The company was incorporated in Estonia in 2018. According to incorporation documents, EcoCrops International is wholly owned by its founder, Mark Lewis Rayner (who is not listed under the “Meet The Team” section of the website). Rayner was previously director of a UK company, Greenwood Marketing Limited, which was dissolved shortly after its incorporation without ever filing accounts.

Update 8.2.18: Research by readers confirms that Mark Rayner was previously involved in the collapsed forestry investment GWD Forestry. Rayner describes his role in GWD Forestry as “sales” on his LinkedIn bio; he was also director of the aforementioned UK-registered company, Greenwood Marketing. Greenwood was an alternative brand name used by GWD. GWD Forestry promised returns of up to 15% per year, and collapsed in 2015.

How safe is the investment?

These are unregulated investments and investors risk losing up to 100% of their money if the timber fails to deliver a return and a buyer cannot be found for your plot.

This is a “landbanking” investment where the owner of a property divides it into smaller units and sells these units to investors. The owner of the scheme remains in control of the forestry itself and the investors are depending on the owner to deliver their returns.

The price of €8,200 is set by EcoCrops International. Investors should ensure they obtain their own independent professional valuation of the plot they intend to buy before handing over money. Just as if you were buying a house, you would hire your own valuer and not simply accept the value of the estate agent (who works for the seller).

The incentives for the scheme owner are heavily front-loaded; over the life of this investment, for every acre sold EcoCrops receives €8,200 upfront and €564 when the investment is sold. Investors therefore need to be very confident that the owner will continue to act in their best interests even though it has already had 93.5% of the money it expects to make over the course of the investment.

The literature puts little emphasis on the fact that the returns are projections. The claim that the investment will “turn €8,200 into €15,466” and deliver returns of 17.19%pa depends entirely on how many wood pellets can be harvested and what they can be sold for at that time, as well as what the land can be sold for.

There is virtually no secondary market for individual plots in a wider forestry investment, and investors will likely be relying on EcoCrops International selling the plots to a third party to exit their investment.

The worst case scenario is that EcoCrops International fails to generate any return from the plots, and cannot find a buyer for investors’ plots, in which case investors will lose up to 100% of their money.

This scenario has occurred with past forestry investments such as GWD Forestry, where investors have received no returns and cannot sell their plots. This means they are effectively worthless. It has also occurred with non-forestry landbanking investments, where the price at which the investors bought their parcels of land bore no relation to their true value.

We are not in any sense implying the same will happen to EcoCrops International, which is a different company entirely; only illustrating the risk that is inherent in any forestry or landbanking investment, and the importance of investors using their own professional valuer and solicitor – just as they would with any other land purchase.

Representatives of the investment claim that EcoCrops International “continues to outperform all other alternative investment options.” Given that EcoCrops International did not exist before 2018 and no-one has yet been invested long enough to realise a return, this is a remarkably premature statement. As EcoCrops International has no past performance record whatsoever, its claim to outperform alternative investments is meaningless.

Regulation

EcoCrops International is currently offering financial promotions to UK investors via Facebook ads. There is however no indication that EcoCrops International is authorised to issue financial promotions in the UK by the Financial Conduct Authority; a search on the FCA’s register for EcoCrops produced no results. A search on the Estonian regulator’s website also provided no results.

Estonia is notorious for its limited financial regulation, and investors should be aware that it is extremely unlikely there will be any regulatory intervention should anything go wrong.

Should I invest in EcoCrops International?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated investment, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment projecting returns of 17% per annum should be considered extremely high risk. As an individual security with a risk of total and permanent loss, EcoCrops International’s forestry plots are higher risk than a mainstream stockmarket fund.

Before investing investors should ask themselves:

• How would I cope if EcoCrops International was unable to find a buyer in the 3-5 year projected timeframe, and my money was locked into the investment indefinitely?
• How would I feel if no returns were realised from the forestry plots, there was no secondary market for my plot and I lost up to 100% of my money?
• Do I have a sufficiently large and well-diversified portfolio that the loss of 100% of my investment in EcoCrops International would not damage me financially?

If you are looking for a “safe and secure” investment, you should not invest in unregulated investments with a risk of 100% capital loss.

RVS offers two software packages – the RVS Closing Price System and the RVS Day Trading System – which claim to allow users to make money through share trading.

Forum posts suggest that RVS are asking for £4,925 for the Closing Price System, with a further £4,925 if the user successively generates £30,000 in profit within the first two years.

Who are RVS?

No details of who is behind the business is provided on RVS’ website, price-systems.com. No business registration or contact details are provided.

There is an RVS Group on the FCA register but it is totally unrelated to price-systems.com and the trading software provider; it sells photocopiers.

The current owners appear to have taken possession of the price-systems.com domain in 2017. The details of who owns price-systems.com are anonymous.

The website has a copyright notice of “RVS 2005-2018”. Given that neither RVS nor its website existed prior to 2017, the copyright date of 2005 appears to be spurious.

A press release for RVS on pr.com (dated March 2018) lists the contact for RVS as George Kingston, along with a mobile number. I could find nothing else to connect “George Kingston” with RVS, and it is quite possible that there is no such person.

If an investment firm is unwilling to disclose who is behind the business, exercise extreme caution before handing over any money.

How safe is the investment?

Short-term share trading is essentially gambling and users should expect up to 100% losses, especially if they are going to buy software from a company that refuses to disclose its details.

Any “guarantees” provided by RVS as to returns are only as good as the company backing them, and as RVS refuses to disclose who the company are, the guarantees are worthless.

RVS reps claim that a “fail-safe” prevents users from losing more than 5%. What they are probably referring to is a “stop-loss” that automatically sells the share if it falls below a certain value.

However, all a 5% stop-loss achieves is to leave you with 95% of your original capital which now has to be reinvested. If you reinvest in a different share with a 5% stop-loss and the stop-loss is activated, you now have 90.75% of your money left, which again has to be reinvested. This can continue indefinitely until you have lost all your money.

Virtually all individual shares will fall by 5% from time to time. This means that a 5% stop-loss makes it extremely likely that, after going up and down for a bit, the end result will be 95% of your original investment sitting in cash. This makes it extremely likely that you will lose 5% of your money in successive trades until you either give up or lose all your money.

Should I invest with RVS?

Short-term share trading is a zero sum game: for every trader that makes a profit, another must make a loss. On average the losses cancel out the profits, and the long-term expected return of share trading is nil, minus costs.

In this case, users are being asked to hand over £4,925, which means the long-term expected return is that users will lose £4,925, plus any other money they spend in order to deal in shares.

No evidence whatsoever is provided by RVS that users can expect to beat the usual odds of short-term share trading.

According to forum posts, RVS reps are claiming that the company can turn £4,925 into at least £25,075 in 2 years. (The specific claim is that investors will make £30,000 in 2 years; from this we deduct the second payment of £4,925 that investors would then be due to pay RVS for the software.) This represents a return of 225% per year even on the most conservative basis. If £30,000 is meant to be pure profit, the return is even higher.

If RVS had in fact developed software that could guarantee consistent market-beating returns, let alone returns of 225% per year, they could licence it to institutional investors and make billions of pounds a year.

So why are they selling it for a piddling £4,925 a pop?

Do not proceed unless you are prepared to lose all your money.

What are the alternatives?

Turning £4,925 into £30,000 is in fact very easy. All you have to do is continue investing £4,925 each year, and assuming a modest growth rate of 5% per year after charges you’d have £30,000 in a little over five years. (Although in reality it is impossible to make assumptions about stockmarket returns over a mere five years.)

Of course, the drawback is that you actually have to invest a meaningful amount of money in pursuit of your goal of getting £30,000.

The advantage is that you won’t almost certainly lose your £4,925 to RVS’ anonymous owners and have to start all over again.

Katar Investments is offering unregulated investment in rented workspace units in the Chinese Business Hub complex in Dubai South.

Investors can invest multiples of $30,000 to buy workspace units from Chinese Business Hub, which then undertakes to pay investors up to 12% per annum “assured returns” as follows:

• invest $30,000 to buy 1 unit and receive “assured returns” of 10% per annum
• invest $60,000 to buy 2 units and receive “assured returns” of 10.5% per annum
• invest $90,000 to buy 3 units and receive “assured returns” of 11% per annum
• invest $120,000 to buy 4 units and receive “assured returns” of 11.5% per annum
• invest $150,000 to buy 5 units and receive “assured returns” of 12% per annum

Chinese Business Hub undertakes to buy the investor’s unit back after 10 years for 120% of the purchase price. It also says that after three years, a “trading platform” will be established to enable investors to sell their workspace unit.

Who are Katar Investments?

Katar Investments’ website lists the directors as Sam Tarling (founding partner and sales director), Jenny Gallgher (founding partner and marketing manager) and Joe Ferreira (director).

Companies House shows the controlling owner of Katar Investments Limited is Geoff Siden (who owns 54% of the company). Geoff Siden was previously the owner of Worldwide Leisure Group, a timeshare sales company, but online reports suggest he is retired. Sam Tarling, Jenny Gallagher and Joe Ferreira own the remaining shares.

Katar Investments Limited’s latest accounts show net assets of £15,875.

Who are Chinese Business Hub?

According to the literature the managing director is Elva Tang, although I could find no mention of an Elva Tang on chinesebusinesshub.com’s ‘About’ page.

The chinesebusinesshub.com website was registered in April 2016 by Tom Farmer of Crowngate International.

How safe is the investment?

These are unregulated investments in individual units of a rented workspace facility, and you risk losing up to 100% of your money if Chinese Business Hub stops making payments and a buyer cannot be found for your units.

This is a “pod” investment, where the owner of a property which others pay to occupy (such as a hotel, care room, self storage facility or, in this case, a rented workspace office) divides the property into units (or “pods”) and sells them to investors at a fixed price.

The investment should not be confused with a “buy to let” investment. With buy-to-let, the investor has full control over who they rent their property to. A buy-to-let investor may employ letting agents to do the job for them, but they can hire and fire the letting agent at will. They may also have to pay ground rent to the freeholder of a block of flats, but the freeholder does not have the right to stop the leaseholder letting out their flat.

In the case of this investment, Chinese Business Hub retains control over who uses the workspace units. Individual investors have no ability to fire Chinese Business Hub if they fail to keep their unit occupied.

The controller of the pod investment typically offers investors a fixed rate of return for a given period – in this case, 10-12% each year for ten years. Responsibility for renting out the units thus passes back to the controller, who must find enough renters to generate sufficient yield to pay investors their 10-12% each year.

The yield in itself does not make the investment attractive, because anyone can take $30,000 off someone and give them $3,000 a year back for ten years. The success of the investment depends on how much you get back at the end, once the fixed payments expire. To address this, “pod” investments typically promise to buy back the investor’s unit at a fixed rate of return – in this case, 120% after ten years.

These schemes are extremely high risk because the promise to pay investors a fixed return of 10-12% per annum is only as good as the company backing it. If The Chinese Business Hub fails to make sufficient income from its rental units to pay a fixed return of 10-12% per annum, it may default on payments of income to investors.

Likewise, the promise to buy back investors’ units at 120% of the purchase price is also dependent on Chinese Business Hub having sufficient liquid funds to do so. If Chinese Business Hub is unable or unwilling to buy back the units, investors will be relying on selling to third parties on the secondary market if they want to get their money out.

In the extreme, investors in pod-type investments have been known to lose all their money (e.g. Store First) when:

• the investment firm stopped paying the promised fixed returns and refused to buy the units back
• it became clear that there was no realistic prospect of the investor’s individual unit being occupied by a renter and generating any yield
• and as the units generated no yield, this made them effectively worthless on the secondary market.

We are not implying that the same will happen to Chinese Business Hub’s units, but this example illustrates the risk that is inherent in investing in individual units within a larger investment property. Investors should not assume that as a workspace unit is a physical property, it must have some value. The value of a room in an office block to which someone else controls access depends entirely on what yield can be expected.

If Chinese Business Hub becomes unable to meet the payments of 10-12% per annum, investors would then have to rely on Chinese Business Hub keeping their workspace occupied and generating sufficient rental income from it.

This means that investors must satisfy themselves that Chinese Business Hub will not fill up its own units before it fills up those belonging to investors receiving rental income.

Market price

Investors purchase their workspace rental units for a fixed price of $30,000.

There is no recognised secondary market for individual workspace rental units and the figure of $30,000 has presumably been determined by a valuer working for Chinese Business Hub.

Investors should undertake their own due diligence on this purchase price to ensure it is fair. Just as when buying a house, you would hire your own valuer and not just accept the valuation of the estate agent (who works for the seller).

It is highly unlikely that anyone would buy a second-hand workspace unit in the Chinese Business Hub, when they could get one direct from Chinese Business Hub with a guaranteed 10-12% yield and a 120% buyback promise.

This means that for as long as Chinese Business Hub is making this offer, investors wishing to exit their investment will be reliant on Chinese Business Hub having sufficient funds to exercise the buyback option.

“Tax free” investment?

The brochure states “There are no income tax thresholds existent in the UAE, so all returns are fully tax-free”. Given that this brochure is being offered to non-UAE investors, this is a rather incautious statement. The investment may well be free of tax in the UAE, but overseas investors may be subject to income tax, capital gains tax or other taxes in their own country.

Should I invest in Chinese Business Hub ?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated investment, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering returns of 10-12% per annum should be considered very high risk. As an individual security with a risk of total and permanent loss, The Chinese Business Hub’s workspace units are higher risk than a mainstream stockmarket fund.

Before investing investors should ask themselves:

• How would I feel if Chinese Business Hub became unable to pay fixed returns or to buy the units back, the workspace unit generated no rental income, there was no secondary market for my workspace unit and I lost up to 100% of my money?
• Do I have a sufficiently large and well-diversified portfolio that the loss of 100% of my investment in Chinese Business Hub would not damage me financially?

If you are looking for a “secure” or “assured” investment, you should not invest in unregulated investments with a risk of 100% capital loss.