130/30 funds...a sure fire way to wealth?
Tuesday, 26 June 2007
“The numbers 130/30 will not mean much to the average investor, but funds based on this ratio are tipped to be the next big thing in UK investment” says Daniel Thomas of the FT on June 23. Read more here.
“At their simplest, 130/30 funds can be regarded as a halfway house between an equity fund and a hedge fund. 130/30 funds allow managers to buy stocks that they think will go up in price for the bulk of their holdings, but also to sell "short" the stocks they do not like.
A number of fund management groups have in recent weeks announced plans to launch these funds.
130/30 funds have already taken the US, Japan and Australia by storm. In the US, it is estimated that more than $50bn has been invested into such funds.
Their popularity is founded on an ability to make additional returns above a traditional fund.”
Here we go again...the next magic formulae to generate above returns for investors. Let me first explain that these are actively managed funds. They seek to take on extra risk to achieve out-performance. If they get it right, then there is no doubting the results. However, how does an investor know which fund to choose? When to buy? When to sell? And how can they define the risk they are taking?
In truth, as an investor you might get lucky when you choose one of these funds, but the odds are against you. By all means gamble with part of your portfolio and be prepared to lose but try not to see these funds with rose tinted spectacles, instead focus on staying in the market and don’t make mistakes. They should not form a large part of your portfolio.
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posted by Murray Round Wealth Management @ 20:36,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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