The truth is that we have already published a guide to investment funds, we already report the deposits with the investment funds, explain what are funds and real estate and we have already provided 5 tips to choose the best investment fund, however, we never demonstrate that there are three investment tips that change the analysis of the before buying an investment fund.
The numbers thus appear to be a fundamental element in the decision making that despite their importance, allow me to inform them that they are worth what they are worth being unpredictable and indeterminable the guarantee that they transmit.
The Economic Cycle is an Indicator
We have all heard about economic cycles and what they represent. If it is possible to predict the point at which the particular economy began its expansion cycle, today, the speed with which events is practically impossible to determine such momentum, thus requiring more data to identify (even if potentially) such a transition .
Investment funds respond to economic cycles and it is perfectly clear that in times of instability and crisis like the one we are experiencing, there is a plethora of investment funds that have very interesting returns.
Worst of all is that, given the decision-making of the numbers in general, the error may be imminent, since with a crisis that has been occurring since 2007/2008 many investment funds that value the crisis present interesting historical returns. To make matters worse, many of these investment funds were created when the economic cycle clearly indicated a decline in economic activity.
Therefore, it is important to evaluate the relationship between the investment fund and the economic cycle and verify that its performance depends on it.
Perform an Autopsy on your Investment Funds
By autopunching an investment fund it is possible to draw some conclusions as to the potential choice.
Imagine the particular investment fund with a defined investment strategy as usual. Common sense reveals that the risk of the investment fund is represented in the assets that the portfolio has.
Similarly, an investor decides to take a certain risk, which is in line with his profile, he knows that the management team of the investment fund aims to meet or exceed their expectations.
This need to exceed investor expectations and thus attract more investors leads the management team to diversify the portfolio of assets in such a way as to create protections for the unpredictable. This protection often penalizes the fund’s profitability and, from my point of view, penalizes the choice of the investment fund.
I am sure that you would not buy certain assets that the investment portfolio has. And despite having a conscience that would never buy them, influenced by the profitability of the investment fund ends up subscribing such fund.
Thus, an autopsy on the investment fund allows the valuation of the assets that are considered to be toxic for themselves and that would avoid their detention at all costs. By identifying such assets you will be prepared for a better decision as you assess the weight of these assets in the investment portfolio and whether or not you should underwrite the investment fund.
If you do not know anything
I have a friend who revealed that he had bought an investment fund that had the potential for double-digit profitability. When I asked him what kind of background was it, I simply got the icy answer, I do not know, I think it’s emerging markets.
When you do not know, it’s best to do nothing, that is, if you do not clearly know the investment that is being proposed to you, then do nothing.
Ask for more information and at home think about the subject and look for information about the target market of the investment fund. And always bear in mind the advice that you should not trust strangers.
If the investment is foreign to you, do not trust it. Play the defense and wait for the counter attack if opportunity appears.