Friday, July 30, 2010

It's Best To Check

As a Telegraph article explains, it's best to check on the holdings of a mutual fund because the names themselves don't always indicate what the funds are invested in.
For instance, you would be forgiven for thinking that the Blackrock Gold & General fund invests in gold. It doesn't, well not directly, but investors won't be disappointed.

It does not invest in the gold price or hold any gold bullion as you may expect, but instead gold and mining equities. This gives the fund greater liquidity and has allowed it to beat the impressive gold price rally over the past five years...

The fund manager Evy Hambro invests up to 30pc of the fund in other mining and precious metals, including platinum and diamonds.
The return can't be quarreled with, but someone investing in that fund seeking exposure to gold itself wouldn't get what (s)he expected. Mutual funds and ETFs are convenient, but there's still some due diligence required.

2 comments:

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