The high cost of guaranteed funds

Article Abstract:

Guaranteed funds offer investors some security when stock markets fall. Guarantees to safeguard capital tend to involve costs and shares have tended to involve a small likelihood of loss if they are held for a three year period. Guaranteed funds are more suitable for investments for short period for people near retirement than for longer term investments made by younger people. Many guaranteed fund products are offered for relatively long periods and investors may face penalties if they cash them in prematurely.

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No-load funds may cost more

Article Abstract:

There has been a trend toward abolishing initial charges on unit trusts in the UK. This may not bring benefits in the long term if exit charges and annual management fees lead to higher payments overall, argue some unit trust executives. Companies offering no initial charges include Legal and General and Virgin. Exit fees are not a problem for investors who are content with their choice of unit trust fund, but could be a problem if the fund turns out to have a poor performance.

Personal finance

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