Sunday, 31 August 2014

How would you describe your economy - Sloth or Honey Badger?

Honey Badger

Saturday, 30 August 2014

Productivity and Growth in Jamaica (Part 1)

Of late I have been taking note of some customer experiences I have been receiving from various enterprises in the private and public sectors. I come to realize that not all customer service delivery is created equally and that some are more equal than some. Let me share my experiences with you. I went to the tax office to purchase an Examiner’s fee, I left the car documents thinking that if I had my driver’s license with my Tax Registration Number (TRN) it should easy for them to access my car information. To my surprise the counter clerk said she needed to see the car papers. Of course, anyone who knows me expects that I am gonna ask why. She simply just responded with “sir, I need to see the documents”, and in the most un-entertaining manner. I lapped my tail and went back to office to fetch them so she could see them. On my way back I started thinking about the experience and I realized the government monopoly on tax collection. That meant whether the counter clerk answered or not, only one place will collect that examiner’s fee. I cannot go anywhere else to do that business. She was not going to ask “how may I help you today?” with a view of stepping outside the system design of the established process, she couldn't care to.

I brought back the documents and she glanced at it and gave it back to me. I paid the fee, she punched in some keys, printer started to run, I got the receipt, and I was out of there. I walked twice back and forth for what could have been a single journey just so that the government of Jamaica could collect the revenue they so badly needed at the first opportunity.

Later that day, I went to the bank to cancel a manager’s check because it had a payee error. When I telephoned the customer service center I was told that I would have to return to the branch I bought the check. I decided I was gonna go to a branch near me to see if it could be done otherwise anyway. I explained the situation to the customer service representative at the bank. She was quite helpful; she was able to reissue a new check and fix the problem without me having to return to the original issuing bank. I paid twice for that check to be reissued and the bank made more revenue from the contact with me and they saved me what could otherwise be a $4000 journey back to the original issuing bank. Can you imagine how happy I was? This felt like a value creation moment.

How do these two stories of my experiences relate?

Tax Office
Process Driven
Revenue Driven
Punitive Base
Incentive Base
Service Focus
Experience Focus
Value Destroyer
Value Creator
Know Employee Reference
Know Your Customer Reference

The tax office employee gets no bonus for revenue collected unless pursuing delinquent tax payers on one hand, but on the other hand, the bank employee gets a bonus from the revenue collected at the end of the year so long as the bank makes a profit. The tax office employee look for the opportunity to make it difficult for you to conduct business with them, and the bank employee makes it seamless to do business.

There is almost no place in the public sector that you can go and get what you need in less than two weeks, and if you want it any sooner you may have to pay a penalty fee for wanting the service any faster. In the private sector immediate service delivery is what is preferred and if you have to wait, the two weeks wait time is regrettably long for both parties.

Simple mindset changes to the public sector functionaries could see meaningful productivity and growth differences in Jamaica. Leveraging the use of technology can easily equalize the public and private sectors and allow for a healthy partnership to move the Jamaica forward.

Feel free to comment and ask question.


Friday, 22 August 2014

Collective Investment Scheme - Unit Trust

Several years ago I was introduced to the idea of diversification and portfolio composition in investment. During my search to find that single investment product that would satisfy both objectives of a diversification and a solid portfolio composition of underlying stocks, I came upon a collective investment scheme described as a unit trust. A unit trust is one form of a collective investment scheme that pools the money of a group of persons and composes a selected group of underlying investment assets beit, equities (stock), bonds, or real estate assets and places these underlying assets into one basket of assets for distribution to other investors in fractional portions. The total portfolio of asset is divided into fractions called creation units and is priced subject to the Net Asset Value (NAV) of the total sum of portfolio of assets divided by the total number of creation units after liabilities.

  Net Asset Value
  Number of units        ─ Liabilities = Unit price

Unit trusts are similar in nature to mutual funds with the slight differences being how they are organized as collective investment schemes. On one hand, mutual funds are either closed end or open end fund, and are distributed in accordance with the mutual fund prospectus, but on the other hand, unit trusts are distributed as they are created and available according to a trust deed.  All collective investment schemes carry redemption rights of the units issued. To exercise the right of redeeming the units held, you may be required to pay a fee depending on the class of unit trust you purchased.

A unit trust is introduced to investors by way of an offering circular while a mutual fund is introduced to investors by way of a prospectus. Both offering documents are similar to each other with some common features such as the:
1.     Borrowing privilege of the fund, (generally no more than ten percent (10%) of the trust/fund’s value)
2.     Strategy
3.     Objective
4.     Fees (Management, Distribution, Administrative, and other expense related fees to operate the trust/fund)
5.     Matters treating on taxes include other investor concerns.
6.     Investment Manager
7.     Custodian/Trustee

You may want to have a look at investing in a unit trust as an asset class that pools the fund from a group of individual and invest those funds for the benefit of all.


Feel free to comment and ask questions.

Unit Trust links:
Sagicor Sigma Funds
JMMB Income Growth Funds

Video Link:

Disclaimer: The links provided are in no way affiliated with or sponsors to The contents are the sole property of the entities listed therein.

Sunday, 17 August 2014

Understanding Collective Investment Scheme - Mutual Funds

Mutual fund investing is an easy way to get diversification into owning a portfolio of investment quickly. This video provide a very good explanation of mutual fund.

Feel free to comment or ask questions


Saturday, 16 August 2014

Understanding Collective Investment Schemes - ETF

Exchange traded funds (ETF) are just one type of collective investment scheme. This video will give you a very good explanation of the working of this kind of collective investment scheme.

Friday, 15 August 2014

Focus Investment InSight

How does a private equity firm makes its money?

By using other people's money (OPM).