Are funds a safe solution in times of crisis?
Certain fund managers provide so-called protected funds, which are simply investment plans that are designed to reduce the downside of falling markets. However, there is a number of financial advisors, who don’t recommend such protected investments.
In times when investors are worried and nervous, it is likely that the response from at least part of the fund industry will be marketing of protected products. A great number of protected products are expensive, poor value and simply over-marketed. This is even more true at times of volatile stock market conditions.
The appropriate time to buy such products, if ever, is when the market is at its peak, but anticipation of pundits get the top right is very difficult and it’s usually only a lucky guess. Investors are advised to contact experienced fund managers who have already had dealings with it all. As soon as markets recover their poise, and believe me they always do, you’ll profit from their funds far more than from protected products.
If you want to start investing on the market but you’re a cautious person you might be interested in defensive funds that focus on stocks that naturally ride out extreme volatility. They won’t roar ahead of the market, but they provide a comfortable amount of protection when markets have problems.