If you ask most retail “investors” on their experience with unit trusts, its quite interesting to find out that most are nursing losses. (We can also add in investment-linked-policies while we are at it)

Isn’t it interesting that this is so when most major bourses are near their 5 year highs?

What gives?

Some emotional “investors” are even calling unit trusts “ponzi schemes”!?

How about CPF approved unti trusts? Blame CPF?

Are they still “ponzi schemes” when we don’t make money after 10 years?

Hey! What ever happened to Buy and Hold? Perhaps 10 years is too short a time frame for “long term” investing?

Or maybe if we don’t make money in any investments, it must be a “ponzi scheme”?

Man in the mirror

Kick me if I am wrong, but I am willing to bet you bought these unit trusts before you ever bought your first stock.

If you didn’t, I switch to plan B. LOL!

You didn’t bought these unit trusts; you were sold to by the friendly bank representative, insurance agent, financial adviser, classmate, relative, or person you call “friend”.

No?

Test questions at the time you “bought” your unit trusts:

1.  Do you know the name of the lead portfolio manager? 2.  Do you know the top 10 fund holdings? 3.  Do you recognise these companies? 4.  Got take a glance at the last 5 or 10 years chart of the fund’s performance? The above are basic elementary facts only. I’ve not even gone on to Sharpe ratio, Beta, Maximum monthly/annual drawdowns, Annual volatility, etc.

You may go huh? Buy unit trusts must know all these?

OK, you are right.

Buy stocks don’t have to know P/E, Price-to-book, Yield, look at charts too. Just press the buy button or call our broker will do. (You may want to stop reading now)

If we know what we know now then

I am quite impressed that quite a lot of retail investors are outperforming their unit trust managers!?

Especially if we only look back to the last 5 years (everything looks good if we use 2009 as index 100).

If you like to do data mining, you may want to use the mean prices of your unit trusts for 2009. Had we bought these unit trusts then, would we be making money like for our DIY stock picks?

Are unit trusts still “ponzi schemes”?

Did we outperform the unit trust managers?

Perhaps its more a case of our financial knowledge has increased since the early days when we were sold to?

If we are banned from investing in equities and ETFs directly now, I am quite confident retail investors with good financial knowledge can still make money from investing in unit trusts.

A vehicle is just a tool. It’s the person doing the driving that matters!


Singapore Man of Leisure (welcome to my blog; just google it!)