Burnt by hot ’sure bets’
The title of an article in the Money section of today’s edition of The Straits Times screamed “Investors burnt by hot ’sure-bets’“. Some of the most sought-after fund categories in Asians equities last year are now among its worst performers this year. Funds invested in Asia ex-Japan lost as much as 44.6% over the last 12 months. In the article, Mr Patrick Lim, associate director of PromiseLand Independent, shared that one of his friends had invested $50,000 into China funds last October, suffering a 50% lost now. His friend was talked into getting a flavour-of-the-month fund at a bank.
As I have shared in my previous posting, Hot funds and hot cakes, such hot ’sure-bets’ are easy to sell. “Everyone else is buying it and enjoying the tremendous growth! You are missing out on a great opportunity if you don’t buy!” ‘Cha-ching!’ goes the cash register, and the fund is sold…
Getting a hot fund is alright if it fits into your portfolio. However, it is a different story if you got it just because it is touted as a must have without any consideration of your portfolio and risk profile. But often, investments are sold without any such considerations. Studying your portfolio takes time and effort, and worse, you may already have a similar fund in your portfolio, ‘wasting’ all the effort and time with no sales. How to hit sales target like that?
Investors have a responsibility not to make rash decisions. Advisers have the responsibility to give proper advice. After all, the adviser is seen as the expert, that’s why people go to them for advice in the first place.
Be careful, be very careful, if your adviser or consultant just wants you to invest without any proper justifications.
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Tags: Mis-selling
