The dangers of tracking bears

Article Abstract:

Tracker funds have become increasingly popular, but passive investment could create problems for investors should a bear market develop. Tracker funds can perform better than some actively managed funds, and their costs are lower, as is shown by the United Kingdom experience. Tracker funds may perform well because of the particular stage of the economic cycle, rising in value when the market as a whole is rising. Tracker funds may be less appropriate in a bear market, or at a time in the business cycle when it is possible to identify sectors that are likely to perform well or badly.

Commercial Banks, Investment Banking and Securities Dealing, Portfolio & Funds Management, Analysis, Index funds

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Time and tide...

Article Abstract:

Investment trust savings schemes have become increasingly attractive to investors in the United Kingdom. They can spread risks by investing in a range of companies, and by ensuring that timing of investments is spread out so the impact of market falls is diluted. Investors fearing that markets could fall may be especially attracted to these schemes. There is a range of minimum monthly contributions, and changes can also vary. Dividends can be reinvested for capital growth.

Portfolio Management

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