Podlov funds are one of the most popular forms of investment and are one of the most suitable, especially for inexperienced investors. They have a bag of weaknesses and “flies” that can literally disgust some clients with their investment.
The fund’s biggest weakness is its lack of transparency, which does not allow foreign investors to control and influence the composition of the portfolio. The basic principle of the existence of mutual funds is the first professional first means, which the investor does not have to worry about, but it also has a second page. Portfolio managers and investment companies first of all, this non-transparency has the opportunity to use some practices that investors would not fully appreciate.
Probably the biggest ailment of mutual funds is very often their not very clear portfolio structure. An investor does not have access to current data on the composition of the mutual fund’s portfolio or on individual securities. The only source of information that is normally provided to investors are regular quarterly information sheets or annual and semi-annual reports. Otherwise, the investor will find out only detailed information.
One of the most common “levren” from mutual funds is the lack of investment style. The manaei portfolio thus seeks to improve the image of its fund by investing in other securities, which they should not, according to the statute. It does not seem then that although the fund has an obligation according to the prospectus to invest in value shares, prefers growth titles, etc. This fact alone does not say anything about whether the fund invests time or bad, but if the manager deviated from the declared style of the mutual fund, investors may be very unpleasantly surprised over time.
We can often meet with the wrong mark, resp. nammenovnm fond. Instead of a neutral exchange of the exchange fund, its portfolio can be very dynamic or, on the contrary, more conservative. For example, the J&T Opportunity CZK fund is ad between exchange funds, but its portfolio is very flexible. At present, almost 80% of all funds (of which 36% in Czech shares) are invested in the event, which is common in risky equity funds. Careful investors may not dream for a long time or you may not expect fluctuations, and dynamite investors may be disappointed by the insignificant returns of the fund. In the best case scenario, investors learn that the name of the fund and its actual exchange do not match, and when the fund is renamed or merged with another fund.
The unfortunate phenomenon that can easily confuse investors is that funds, which should have different strategies or exchanges, have a very similar portfolio composition. This is the most common problem for single-company funds, for example in groups of profile funds. Although the investment company presents these funds to clients as various products that are good in the portfolio due to diversification together, in reality their portfolios are not very different (the most important positions in some securities are exactly the same). The client then believes that he has performed sufficient diversification, but the opposite is true. A significant loss of several titles then leads to the remaining losses of the entire fund portfolio.
Cosmetic rights enhance the image of the fund
One of the practices that can have a very detrimental effect on investment investments is to improve the performance of the fund in the client, the so-called windows dressing. This is due to the fact that the portfolio manager buys securities that meet the conditions of the fund’s strategy or to cover possible errors of the portfolio manager before the regular publication of the fund’s first funds (at the end of the quarter or the end of the year). At the end of the quarter, it happens that there are shopping titles in the fund, which have been very successful lately, and on the contrary, those who lose the overall picture of the fund are lost, etc. The portfolio of conservative fund managers can then get rid of many risky securities, which have nothing to do in the portfolio, but due to the increased performance and improved image of the fund in the eyes of investors are there.
A similar boil is the so-called portfolio dumping, which is able to improve the performance of securities in the portfolio. Managers of large funds (most of those who do not want to lose the reputation of the most powerful fund, or, conversely, those who are well-off) can artificially increase the demand for certain titles, which has not been possible recently, and thus increase their price. The fact that this improves the overall performance of the fund is evident.
Both methods have a negative effect on investors, partly because their other life is short-term (especially in the case of dumping portfolios, when the price of the securities in question falls again to the original level), and partly because the remaining increase in the fund’s costs. These then have a negative impact on the overall performance of the mutual fund as a result.
Regulatory bodies, of course, try to limit all such practices as much as possible, their full elimination is more difficult than reality. In any case, it is up to the investor to find out as much information and data as possible from the previous functioning of the mutual fund before investing in the fund and not to buy rabbits in a sack.