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Written by Wilfred Ling
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Thursday, 21 August 2008 |
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Read here about the meaning of beta: HERE. Why it is important? Some fund managers have no real skill. They increase the return of the fund by having a high beta. During the bull run, their fund appears to outperform their peers and benchmark. But the ugly truth is revealed when the bear market arrives. Their fund plunge like a falling knife. Anyone who try to catch it is going to get from it. One fund I saw has a beta of 2!! And somemore this is a retail unit trust. What is this? Sound to me like a hedge fund with a leverage of 100%! Is there no regulator to monitor the competency of these fund managers? Flee from this type of fund. It is just better off buying the index. During the bear run, definitely will do beter than these fund managers. During the bull run, just invest a small amount say 10% into leveraged ETF of say x2 and the beta of the entire passive portfolio becomes 1.1. Do-it-yourself portfolio is certainly better than paying these incompetent fund managers!
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