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MMPI Investment Report 2019 Q2

Another great quarter for MMPI’s investment products! – this time with 7 maturities posting returns ranging from 101.00% to 106.00%. These are attractive pay-outs given that deposit interest rates are close to zero and government bonds are producing negative returns.

The MMPI Escalator Plan Series 47A and 47B, which tracked the performance of the EuroStoxx50 index, matured early after just one year paying 103.20% and 105.40% respectively. The products were assessed as risk score 4 on the 1-7 risk scale using European regulator guidelines (ESMA). A risk score of 4 implies that the capital is more at risk than, say, a bank deposit (risk score 2). The conditions of this product meant that the investors’ capital was 100% secure provided the index did not fall by more than 40%. At its worst point, the index fell by only 11% but, regardless, it returned 103.20% and 105.40% after just 12 months.

The MMPI Escalator Plan Series 48A performed even better. It returned 106.00% after 12 months. This product tracked the performances of three large global pharmaceutical companies; BASF, Glaxo SmithKline and Sanofi. The construct scored a slightly higher score at 5 but the capital safeguards were secure.  In Series 48A the investors’ capital was 100% safeguarded provided none of the shares fell by more than 50%. BASF, which ran into some bad publicity, fell by 13% – the others were positive. Despite the fall in the BASF share price the product still paid out because of a clever control mechanism. Returns were determined not by the initial price level but by a mark 15% lower. So despite the 13% fall in BASF the product returned 106.00%.

The MMPI Escalator Plan Series 48B (a sister product of 48A) narrowly missed out on an early maturity – but it will have another chance in October this year.

It remains the case that just 4 of MMPI’s investment products out of a total of 56 maturities in its Escalator and Protector series, stretching back over 10 years, have returned less than 100% of the initial capital invested and these were pre-determined downsides at 5% – 10% of the initial capital.

MMPI recognises that capital security is very important for investors. In the cases cited above the protection was provided by BNP Paribas and Societe Generale, two of Europe’s best capitalised banks. The banks currently have top-quality credit grades and stable ratings that are well ahead of the Irish banks.

We realise that the MMPI Escalator Series of investments is not for everybody. But the investments do represent an excellent opportunity to beat deposit returns. There is additional risk associated with the Escalator Series and this needs to be adequately borne in mind and understood.

As always MMPI recommends that potential investors should read the product brochure where a full list of WARNINGS is provided. Specific professional advice, offered by MMPI in private consultation, should always be sought in relation to individual circumstances.

MMPI will continue to take soundings from investors as to their investment preferences. To-date, investors have been most concerned about achieving income in a low interest rate environment. Many have come to realise that deposit returns are not keeping pace with inflation and that this position is unlikely to change over the next few years.

Investors are also concerned about access to funds in case of emergency or where personal circumstances take an unexpected turn. Investments in the MMPI Escalator Series normally have a nominal 5-year term but each investment also contains daily liquidity. This means that the funds may be redeemed at any time during the investment term. Some early redemptions may mean that investors will not get back all of the money they invested but there are plenty of other examples where investors, requiring early redemptions, are in a position to receive 100% of their initial capital plus additional positive growth.

Should you require further details about any aspect of the MMPI Escalator suite of investment products please call the office on (01) 66 88 322 or e-mail invest@mmpi.ie. Full details are available on our website at https://www.mmpi.ie/investments/investment-products/

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