Bonds are generally used by investors in facing their biggest problems in every situation they face. After several years of raising the stakes, bonds generally yield less income and lesser potential for profit.
However, there are managers who chose to remain bearish on their investment market’s fortunes include a number of global emerging market fund managers who have been purchasing developed stocks in the long run. This was considered a great benefit among investors in the past weeks as shares from the emerging markets listed in Asia have suffered tremendous losses.
Several top fund managers have stated in recent months that they are indeed struggling in finding more ways of valued opportunities within the region. There is simply not an infinite supply of good companies to own even before the emerging markets were seized by the latest financial crisis. Moreover, fund managers are being forced to search for unconventional remits other than their usual remits.
Other comments from top analysts warned investors who are unaware of the gradual change in their respective portfolios. When managers diverge away from their market, it can result in investors taking on more risks than they previously did. The strategy is basically reviewing investments and checking whether they are doing their jobs as anticipated.
Non-conventional investors are facing a rather difficult challenge in ascertaining whether their fund is steering away from what was originally intended. Monthly fund updates are provided by fund management groups, however their information is often several months out of date. The monthly fund updates are normally provided by fund management groups, however the information is sometimes out of date for several months. Another limitation is the fact that these groups are disclosing only a small proportion of their portion of the fund’s actual investment.
In the case of “open-ended funds” which are very popular and are listed on the stock market which are more accountable to investors, are predisposed in providing more information regarding on where and how they should invest.
Should investors feel anxious regarding fund managers gradually changing their remissions they should instead select a fund where there is no room for flexibility in investing outside the mandated protocols.
Do investors really know what they are buying?
Direct investors who make their respective fund choices and at the same time use brokers should remember that some funds will not be needing a full observance in remitting as their name suggests. Below are some common misnomers in the world of funds.
- Equity fund managers can invest 20pc of their portfolio outside the range of their home market. Therefore a UK-labelled fund could invest 20pc of its assets in terms of US shares.
- Absolute return funds do not solely guarantee an absolute return instead a majority of the funds can still suffer substantial losses.
- Bond managers can invest in a maximum of 20pc of their portfolios in equities but are required to invest a minimum of 80pc in denominated bonds.
- The majority of the current global equity funds are not generally global as many wound think. Some have a heavier exposure to the UK and the US, hence a country specialist fund manager is better suited for this situation.
- Property fund names can deceive investors which often fail to tell between whether funds are invested directly in property or different property shares.