Investment Supermarkets and fund tips – Fund Supermarkets are quite popular; they tend not to provide advice but often offer lists of the most “popular investment funds” or “best-buy lists”. I met someone recently who was buying shares in single companies on the basis of coloured scale which was green if more people were buying a share and red if more people were selling a share.
I have nothing against Supermarkets, I regularly go to Waitrose to select a nice bottle of wine, perhaps with my favourite cheese – Manchego. I wonder however if that is the right way to choose investments?
A recent report in the Daily Mail includes the statement that “Best – Buy lists are, in reality no more than a marketing gimmick that helps brokers sell investments”. Also that many of the best buy investment funds turn out to be duds.
Also, shock horror that there is a strong rumour that the fund supermarkets charge company’s additional fees to appear in their lists. I thought the FCA had put a stop to this practice?
After reviewing the performance of the funds included in the best buy list, the article concluded by stating that according to the law of averages, investors would have had as much chance of getting a decent return if they had picked a fund at random. And that the best buy lists were full of mediocre funds.
In my opinion clients obtain comfort from dealing with a large institution, such as an insurance company or large fund supermarket warehouse, these provide a “parent” for the investor who perhaps because of lack of knowledge in investing feels at times like a “child”, once more.
The alternative course of action, that is paying fees to a highly knowledgeable adviser who will educate them over time in how to invest properly – is of course rather more hard work.
