Making Investment choice
Discuss about the Reputation And Performance Fee Effects On Portfolio.
In this era of modern world, the only legit ways of making money are two: working for someone else or working for oneself, and the second option is commissioning the personal assets to work on ones behalf. This implies that keeping life savings on the back pocket or under the mattress, instead of finding an opportunity to invest in, the money won’t be able to work since it will never increase in value than what had been saved or received through inheritance. Contrariwise, investors make money by getting interest on what they save by purchasing assets that add value with time (Amihud & Travlos 2012, p.603).
It doesn’t matter on how investment is done. Whether it’s on stocks, mutual funds, precious metals, bonds, real estate, and small business or combining several assets, the goal has always been the same: making investments that generates additional cash (Bowers & Miller 2013, p.34). As the old saying states, “Money isn’t everything but happiness alone can’t keep out the rain.” So, whether the objective behind saving is to send kids for college studies or to retire with a yacht in Mediterranean zones, investing is very important in achieving life goals.
Faulty choices in regard to investing have always costed the investors’ huge losses, which in turn have scared other potential investors. This has been the case especially where investment choices are made blindly without putting the prevailing conditions of where to invest into considerations (Li & Filer 2017, p.80). For instance, in a case where an investor just chooses to invest in a certain country without considering its economic status, the likelihood of such an investor falling into the trap is always high. Besides the economic status of a country, there are other factors which play a key role in making an investment decision. Factors such as legislations enacted by the country in regard to investment as well as protecting investors are of paramount importance.
Again, settling at the country with a potential to investing doesn’t clear the sky at once. This is because the choice of the industry to invest in is of equal importance. The future potential of an industry is the main consideration under this bulletin because an investment is not a one-time affair but a life time affair. The progress of a certain industry over the past years is used to determine its future potential. And this implies that an industry which has been growing in accordance to past records has a higher potential to invest in than an industry that has been stagnating (Haley 2013, p.929).
South East Europe Economy
According to a report by World Bank in regard to South East Europe economy of 2015 held in Belgrade, the devastation flooding witnessed in some of the countries within this region had brought the region’s economy into a standstill. Registering a growth index of 0.2%
According to the director for South East Europe (SEE6), the high demand for exports from SEE6 was a promising force towards the growth of region’s economy in 2014 despite of the weak performance and a very frustrating global recovery in Eurozone .However, as a result of political uncertainties and reduced investments within the region, the effects of devastating floods which had hit the regions in the year 2014 were exacerbated (Huddart 2016, p.227).
Primarily, the poor economic performance within the SEE6 region has been associated with weather shocks, contributing to the initial evidence that the economic performance among the SEE6 countries is highly vulnerable to weather (Mittal & Vyas 2007, p.12).
The floods experienced in 2014 have been appraised to have costed Bosnia and Herzegovina around 15.0 % of GDP with Serbia around 4.7 % of GDP in the lost outputs and damages (Kova?i?, Zealand &Vukmirovi? 2008). Specifically, the damaged power systems were the main cause of business frustrations in Serbia, while the agricultural sectors of Herzegovina and Bosnia were harmed by the damaged crops. Almost all the segments of the economy were harmed by these floods.
As an angel investor and putting all the economic factors into consideration, among the SEE6 countries I would propose to invest in Serbia. For one, Serbia has recently instilled favorable business climate conditions which are suitable and can allow new startups to thrive. The recent World Investment Report of 2016/2017 tabled Serbia as the sole country from South-Eastern Europe where companies and foreign direct investments from abroad are finding favorable found for development and stabilizing (Mittal & Vyas 2007, p.12).
Again, Serbia has recently improved its business climate by working on the strict conditions which are related to favorable tax regimes and fast incorporation of foreign investors. In consideration to confidence and stability of its economy, Serbia has been welcoming the investors without discrimination to operate within its main industries (Mittal & Vyas 2007, p.12). By this approach, the Serbian company formation agents have been assisting investors with information on how to set up companies and the procedures involved for that matter.
Serbia’s geolocation is strategic and in many cases it is seen as the gateway to Europe. Such a location is significant for an investor as it helps in sustaining businesses from abroad. In this case, Serbia acts as the link between Eastern and Western parts of the old zone. Its well-developed infrastructure will allow investors connect with Russia, Spain, Germany, France, Austria, Italy, Benelux and many more (Mittal & Vyas 2007, p.12). The country’s land, air and water transportation will sustain a good way of business activities within the country. In regard to political stability within the country, Serbia has a relaxing climate as well as a government willing to sustain its foreign investors by offering a number of incentives, trustworthy fiscal backgrounds and proper administration.
Country of choice
To streamline the course of the business and to profit by a wide range of assessment exclusions, Serbia made the free zones and related modern parks. Novi Sad, Pirot, Zrenjanin, Vranje, Belgrade or Krusevac are just a couple of Serbia’s free zones with well-developed frameworks and the likelihood of benefiting from 0% VAT for imports and exports from and in these regions if half of the products are made with local components (Mittal & Vyas 2007, p.12). Multinational organizations fascinated in working with low work costs among numerous others can pick the facilitated commerce zones in Serbia. Concerning the Company establishment process in Serbia, this takes just a couple of days if all the documentation agrees to the guidelines of Companies Act in Serbia and in the event that the owner approaches the country specialists in company incorporation for help.
Since most business visionaries from abroad consider the tax regime in the picked nation for business, the Serbian government has concentrated on establishing a friendly structure in this sense. For example, the corporate benefit assess is set at 15%, the expense on profits, sovereignties, capital picks up and interests is a rate of 20%, the VAT has a similar rate however bring down in specific fields, and the withholding charge is set at 20%. Contrasted with other European nations, Serbia offers low charges in the business field.
Encouraging business-friendly methods in Serbia has been the beginning stage to draw in foreign investors, the manufacturing sector not exceptional as the experts support this vital division and the large number of tasks included. Hardware, apparatus, sustenance and refreshments, tobacco, materials, oil based commodities, wood, and plastics are a piece of the thriving assembling division in which most FDIs coordinated from abroad. This is the motivation behind why the work in this field expanded by half throughout the previous two years (Mittal & Vyas 2007, p.12).
The economy of Serbia depends mainly on the sectors of manufacturing and exports which have been driven by the foreign direct investments. Its FDI is concentrated on a number of industries such as electronics, metal processing, textile, financial, beverage and building. On the side of expenditure, household based consumption has been the main GDP component accounting for 76% of the total, followed by the gross fixed capital at 17% and then the government expenditure at 18%. The exports accounts for 44% of GDP and imports 54%, deducting 10% of the total GDP as indicated below
Why Serbia?
The domestic economy of Serbia has portrayed the signs of becoming the main engine to drive the economic growth of the country recently by reducing the unemployment rates, increasing wages and FDI inflows from EU. Its economy is expected to grow by 3.2% in 2018, equivalent to 0.1% increment from what was recorded in 2017. For 2019, the GDP growth has been foreseen to dip up to 3.1%. From these statistics, Serbia is a country with potential of growing and a promising future hence a wise choice to invest in.
From a brief scrutiny of Serbia industrial sectors, it is clear that the country enjoys ideal climatic conditions favorable for agricultural production, a factor that has ranked the country among the greatest exporters in the food industry among all the Central European Free Trade Agreement states. Its favorable agricultural background and an infrastructure which is reliable has made it a center of attraction to the world largest food processors, likes of Nestle, PepsiCo and Rauch, to establish production firms in Serbia (Mittal & Vyas 2007, p.12).
Having a strong background in engineering education and an advantageous location geographically, the automotive industry in Serbia has been featured as an important industrial sector within the economy of this country (Vidas 2014, p.1593). Most of the major European and Asian car companies prefer Serbian automotive corporations as suppliers.
The ICT industry in Serbia is also rising to become a new pillar of the country’s economy. Armed with extremely-qualified as well as multilingual labor force, sound telecommunication and the ICT infrastructure systems, Serbia is in the process of becoming an alternative to most of traditional ICT markets.
Specifically, Serbian government has been implementing auspicious and unceasing incentive packages in favor of Information and Communication Technology (ICT) with an aim of attracting more investors within this industrial sector (Knezevic 2007). The state grants have always been provided for the few investors who have shown interest on the sector. Considerable subsidies ranging between 17% and 70% for eligible investment costs have also been provided although depending on the worth of investment on this sector to attract more investors who will be able to boost the industry.
In consideration to these three main sectors of Serbia economy, it comes out clearly that the ICT sector remains to be the most promising industry in Serbia (Stefanovic, Matijevic & Devedzic 2010, p.73). The rest are already crowded as it can be seen from the case of food industry where major food processing companies like Nestle, PepsiCo and Rauch have already ventured in and invested in the industry. From the current statistics, the export of ICT services from Serbia went up to EUR 900 million in 2017, which was a 21.5% more compared to what had been realized in 2016.
For ICT area to convey on its roles in monetary and social advancement, it is important that nations receive empowering lawful and administrative situations that help e-improvement, the “Enabling environment”, for this case implying strategy, lawful, market, and social contemplations that collaborate both at local and worldwide levels to make prolific conditions for ICT-driven development (Gospi?, Muri? &Bogojevi? 2012, p.51). The significance of this empowering condition is perceived in the Declaration and Action Plan of the principal period of the World Summit on the Information Society (WSIS), which stressed that a reliable, straightforward, and non-prejudicial condition is basic for the utilization and development of ICT industry in the creating scene. As a rule, making the “right” condition is an overwhelming errand for policymakers.
While best practices are rising up out of nations that have effectively made strategies to encourage advanced openings, there is no single outline that can be followed for each situation. Given the setting of the joining of media communications and in-arrangement advances, effective changes must consider the requirement for far reaching changes that cut crosswise over customary innovative and business limits (Panajotovic, Jankovic &Odadzic 2011, p.118). What’s more, the part of controllers and direction itself must be reexamined. A few zones where administrative change will be critical are the direction of interchanges administrations and framework, information protection insurance, security, licensed innovation rights, open foundation, Internet administration and general standards of rivalry.
In light of global experience, the perfect systems for augmenting the commitment of ICT to advancement comprises of open strategies that apply to various layers of the ICT advertise (framework, applications, and consumer certainty). The fundamental objective of administrative change is to make a steady, open, and future-verification condition that empowers trust in the ICT industry (Dženopoljac, Janoševic &Bontis 2016, p.373). A noteworthy advance towards this objective is to build a clear and straightforward administration structures and regard for the run of law which has been effectively enacted in Serbia to open the industry for potential investors.
Driven by both the Serbian government and different initiatives by non-profit associations as well as international investors, the ICT market of Serbian achieved new goals in 2017 (Ignjatijevic, Matijasevic &Caric 2010). Both the state and private entrepreneurs have united to coordinate the ICT market towards advancement as opposed to simply accumulating the experiences of different countries. Together with the double education law (introduced by Swiss government specialists), another office for ICT, e-government and clear prioritization of the ICT segment in perspective of worldwide advancements, Serbia has put forth a solid ICT expression, which is quite encouraging for potential investors.
The Serbian government has recently declared, in reference to the current year’s report of the National Bank of Serbia on the adjustment of installments appeared (Knezevic 2007). Accordingly, a positive development slant in this industry has proceeded, from more than 20% every year in the past three years.
The ICT industry, which is in the focal point of the legislature of Prime Minister Ana Brnabic, remains the most encouraging industry in Serbia and is one of the greatest drivers of the nation’s economic development (Vidas 2014, p.1592). A positive pattern of quickened improvement and advancement of administrations proceeded, essentially in the field of Internet and versatile advances, applications improvement, and outsourcing, the legislature declared.
ICT sector in Serbia has a high annual growth rate of 18.3 percent and a 5-year projected CAGR of 16.8%. This sector has some advantages which are attractive for investors. (1) has Qualified labour resources, (2) the culture of creativity, receptivity and flexibility for emerging technology has been established , (3) the country has a high technological level which has kept in phase with world trends, (4) the country boast of high level skills,(5) the country has been an International competitive industry on software development. Below is an ICT chart for Serbia
The ICT sector contributed most to the decrease of foreign exchange shortage from EUR 473 million of exchange adjust and represents half of the exchange adjust all things considered. Programming represents around 70 percent of the exchange adjust, which is recording a noteworthy development inside the sector (Knezevic, Jeremic, Zarkic-Joksimovic & Bulajic 2012, p.171).
Exports of ICT services has been higher than the exports in conventional branches of the country’s industry, for example, foods stuff, non-ferrous metals, and elastic items, and it was just slightly surpassed by exports of electric machines and street vehicles, whose exports surpassed EUR 1.2 billion (Panajotovic, Jankovic & Odadzic 2011, p.118).
The Serbian government has propelled various ventures for the change of education, foundation and the legal structure for the advancement of the ICT business with a specific end goal to build the quality of experts available and in this way address the issues of digitization of the traditional enterprises (Gospi?, Muri? &Bogojevi? 2012, p.51).
Among the most essential results of the Serbian government in 2017 for the advancement of ICT sector are the expansion of enrollment quotas in IT sector resources by 20%, the extension of convenience limits of the biggest IT resources, and the inception of the development of advancement framework in Nis, Novi Sad and Belgrade, in which we have contributed about EUR 70 million (Dženopoljac, Janoševic &Bontis 2016, p.373).
Inside the system of training change, informatics was presented as an obligatory subject from the fifth grade of primary schools, roughly 1,750 schools have been associated with a safe scholarly Internet arrange, and a second period of retraining in the IT segment was propelled (Gligorijevi? &Ubavi? 2016, 45).
A noteworthy advance has likewise been accomplished in the region of settling the issue of accumulations for level rate assesses installments. In 2018, the Government of Serbia will keep on working on the execution of 35 ventures that the Ministerial IT Council has embraced as a need and which will add to the further advancement of the ICT business in Serbia (Ignjatijevic, Matijasevic &Caric 2010)
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