The price of stock market security

Article Abstract:

Investors may become nervous during a bull market and seek guaranteed funds and guaranteed-equity bonds to reduce their risk levels. These guarantees have to be oaid for and returns tend to be poorer than non-guaranteed products when markets rise. Dividend income may not be available, charges may be high, and investors may have to commit themselves for a five-year minimum period. There may also be risks from counterparty defaults. Guaranteed products may still be worthwhile prior to cashing in a pension fund.

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When high charges destory added value

Article Abstract:

Funds of funds are investment vehicles investing in other funds, and there are over 100 funds to choose from in the United Kingdom, compared with seven funds 10 years previously. Diversification can reduce risks, but returns tend not to be spectacular. The best funds cannot easily be identified and weak performers can affect performance as a whole. Double charging is also a problem since managers levy charges and there are charges arising from underlying funds.

Personal Financial Mgmt

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