Tuesday, December 30, 2008

Fund of Funds - The more fund managers there are, the more people are managing my money, therefore i feel safer.

We engaged a cheapskate artist to help us draw a pictorial view on why its not wise to invest with fund managers. With the latest invention of fund of funds, which is basically, a fund which invest in other funds, its even more silly. The more managers there are, the more manager fees one pay, the less cash is actually invested. This is lame.
With the recent scandal of Madoff, it signals that the more people there are managing one's money, the higher the risk there is. Remember the lawyer who ran away with the clients money? So, in conclusion, the above shows when one uses fund managers, they decrease their returns and increase their risk.

But if one is really clueless about investing, then just go for exchange traded funds, like for example STI ETF or Lyxor where your investment just tracks the index but fees are way less. Yeah it kinda sucks that fees still have to be paid for someone just to copy and track the index, but its the lesser of 2 evils.

Read what the Old Fogey Warren Buffet has to say about fund managers in general.
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

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