Posted on August 24, 2009 - by Eng Tiang Chuan

The Almost Perfect Contrarian Indicator

Photo by John Althouse Cohen

Advisers are constantly bombarded with email updates and sales kits from fund houses, especially the well performing ones. The account managers are just doing their job promoting their funds. This can also be a good source of information for advisers, be it for performance ranking, latest economic conditions or even academic information. However, adviser must conduct their own due diligence as no fund house would criticize their own funds. Not all advisers do that.

Hot funds are promoted aggressively by fund houses. I remembered a particular fund which managed to do well in 2008 being marketed very aggressively. Performance updates were sent out regularly and numerous product trainings were given. Some advisers were sold and they too promoted this fund heavily to their clients. During a recent in house investment training, an update on this fund was given. Most were shocked by the poor performance. Few knew about it because the performance updates has stopped some time ago, presumably due to the under-performance.

China funds were also promoted heavily recently. And what happened to the Chinese market? Read more…

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3. Why investing in mutual funds or unit trusts may not be a good idea – part 2