 |
| Adrian Mastracci, investment counsel at KCM Wealth Management, says “Investing in mutual funds has much to do about a matter of trust. Investors want transparency, fair treatment and an even playing field." |
For Immediate Release
Vancouver, BC (December 11, 2003): By now, just about everyone knows that regulators are probing a number of mutual fund companies and their practices. Especially in the US.
Adrian Mastracci, investment counsel at Vancouver based KCM Wealth Management says, “Investors from all walks of life have placed their hard earned savings in a plethora of mutual funds. While investor fears have risen considerably from the reported practices, investors should exercise caution and judgement when contemplating heading for the exits.”
“Investing in mutual funds has much to do about a matter of trust,” adds Mastracci.
“Investors want transparency, fair treatment and an even playing field,” remarks Mastracci, “And they are entitled to that.”
“Investors don't need any of the reported obstacles and distractions,” explains Mastracci, “But let's also realize that not every fund company is engaging in these practices.”
“The well publicized mutual fund scandals and problems could surface in Canada in some form,” indicates Mastracci, “Hopefully, the likelihood is less as Canada's mutual funds are typically smaller than many US counterparts.”
Some due diligence helps. Investors may consider these ideas:
- Make sure that the fund's investment objective matches the personal objective.
- Keep tabs on whether a fund's investment objectives change.
- Become familiar with the mutual fund prospectus. It contains a wealth of information, such as the fees and costs area.
- Focus more on Exchange Traded Funds (ETF’s) and index funds for at least part of the portfolio holdings.
- Trading activity within ETF’s and index funds is kept to a minimum, usually when one company is removed and another is added.
- Management expense ratios (MER's) paid on ETF’s and index funds are generally lower than those on traditional mutual funds.
- MER’s paid directly from a mutual fund are not deductible for tax purposes by the investor.
- When selecting traditional funds, look for those that have low turnover of individual securities and consider the impact of MER's on investor returns.
- Be vigilant of mutual funds that replace their managers, sometimes suddenly.
- Be aware of major and/or sudden shifts in performance, both up and down.
- Consider the costs of exiting, but selling ought to be for the right reasons.
- Keep tabs on the overlap of securities among the funds owned. Often, the top holdings are similar.
“Staying ahead of the of the information overload is no easy task,” suggests Mastracci, “Visiting www.globefund.com produces a total funds list exceeding 5,400 entries. That’s only for Canada!”
“And a typical simplified prospectus can easily range from 30 to 300 pages of cheerful reading,” states Mastracci, “Yes indeed, that is the simplified version.”
“Maintaining perspective vis-à-vis one’s goals is all important,” concludes Mastracci, “Investors should not fret about it to the point of exhaustion. Being aware of the alternatives is a good start.”
NOTE: If you have a question on how this may relate to your situation, please contact us.
|
