Proven launches investment product, urges Jamaicans to buy fewer cars
Jamaicans need to invest more and buy fewer luxury cars, says chief executive officer of Proven Wealth Chorvelle Johnson.
"Jamaica is not a saving and investment hub. People change jobs and take their pension and spend it on buying a car or something like that, versus putting back that money [to work] for the long-term," said Johnson on Tuesday following the launch of a US dollar managed portfolio product developed by her company.
“So we are doing our part in helping to build Jamaica by saying to people start saving — and why not do it with us," she said.
The new product dubbed Proven Plus attempts to drive high net worth individuals to invest a minimum of US$200,000 for a tenure of three years.
Proven Plus’s portfolio manager Aisha Barrett will invest in US equities and emerging market bonds. Investors will be charged a 1.0 per cent management fee, but won’t be charged for trading fees.
Jamaicans consistently purchase new and pre-owned cars, a market that thrives on cheap loans from lenders to back auto purchases, but was also fuelled more recently from the wash of money from the multibillion-dollar NDX payout by the Jamaican government last yeas well as more recent profit-taking from the record performance of the stock market last year and in early 2016.
In April, the Bank of Jamaica in its Financial Stability Report 2015 said Jamaicans were borrowing at record levels when compared with a decade ago. Roughly $7 of every $10 of household disposable income goes towards paying debt to the banking sector. That compares with less than $5 a decade earlier.
The reason was due to debt rising faster than income, according to the stability report, which provides an annual assessment of the main financial developments, trends and vulnerabilities of Jamaica's financial system. Essentially the report said that debt is growing at double the rate of income.
Proven expects its clients to realise an attractive rate of return with this product, according to Ryan Reid, head of wealth management, and Richard Gordon, senior manager for asset management at PWL Transition Limited.
"Clients are demanding more and more creative and structured products. Proven Plus is ideal for the sophisticated investor," said Reid.
"We believe that US$200,000 is a good amount. It is not too small and not too big," Gordon said of the investment floor set by Proven.