Chapter 22

Ten Traps and Pitfalls: What the Managers Don’t Tell You

In This Chapter

arrow Understanding what you’re buying and the costs involved

arrow Being sceptical of guaranteed returns

arrow Looking out for tax, economists and the marketing hype

arrow Discovering where fund managers invest

Read a managed fund’s product disclosure statement and you’d be forgiven for thinking that much about managed funds smells of roses. From being seduced by the marketing hype to the comfort of investing with a big name, investors should take a step back before making the leap into managed funds.

In this chapter, I look at ten of the traps and pitfalls that investors may come across; things that are better to know before investing rather than afterwards. Knowing what you’re buying sounds obvious. Looking at recent history and failed investments makes clear that many investors may not fully appreciate some of the risks in certain investment types. Costs and tax are other things investors need to keep an eye on, as well as some of the more exotic and sophisticated funds that are at the margins of most investors’ investing ...

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