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Learning lessons from Polygon

If Polygon means that the parrot is out squawking MVA, MVA, MVA, then perhaps it would draw attention to the fact that with-profits bonds are not the only environment that has to protect itself.

We now have property bonds with a six-month moratorium which could stretch to 12 months if they want to. It is an ideal environment to sit and watch your investment deteriorate.

Polygon, reported in the Telegraph as one of London’ s biggest and best-known hedge funds, has brought in special measures to cope with a large number of investors who want to withdraw their money.

Markets need to be run on a proper, professional basis.

The sentiment, supported by several prominent journalists and parroted by poorly (financially) educated politicians, that market value adjustment or repayment moratoria are devices to somehow cheat investors is misplaced. Northern Rock and Bear Stearns have both found out to their own cost (and that of a multitude of investors) that fundamentals and general principles in operating financial products have to be adhered to or there is catastrophe.

Armageddon is not on its way. Well, not unless those who are overpaid for their ability interfere yet again in markets that they know precious little about.

I hope the Polygon experience will teach those who seek to ridicule traditional with-profits-linked investments that MVA does not mean abandon ship, it means stay where you are and let us see what is going to happen, and protect the majority against a foolhardy minority.

TErEnce O’ Halloran
Chartered financial planner

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