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Investment Funds: Burden or Reliable Protection from Inflation?


News of investment companies. A lot of investors care about safe and effective maintenance and growth of their savings. Opportunities provided by investment funds are absolutely limitless and bear certain risks. So, what investment funds are and what do investors find attractive about such kind of investment?

What makes investment funds attractive to investors?

Let us clarify the definition of investment in global practice. Investment is the action of placing one’s monetary funds into any possible assets with the aim of getting additional return. Objects for investments and potential sources of income include money (currency, deposits, and certificates), corporate shares, investment companies (collective investments), bonds, real property and land, precious metals: gold, silver, and other goods.

Transactions with the abovementioned categories of investments require considerable sums, experience, and knowledge. If you are an active, experienced trader or businessman, this article is not for you.

We are appealing to people that have their main occupation, gain regular profit from it, and are going to regularly invest a part of it. The “golden rule” of investment and advice from the wise says “keep 10% of earned money for yourself.” Money, shares, and investment funds seem to be the most attractive and the easiest to access.

Should one allocate significant funds to bank deposits, UITs?

Inflation – money’s enemy No. 1. Ukraine is among the countries with developing economies, which means that it is unprotected from inflation. Excess inflation requires excess return from investment in order to maintain initial funds. Money placed under a matrass bears no protection either from inflation, or from physical loss. Consequently, keeping money under a matrass is meaningless. Therefore, investment is the only way out. The first thing that comes to one’s mind is a bank deposit. It certainly is better, but far from ideal:
traditional banking rates hardly cover inflation. Below follows a chart of dynamics of consumer inflation index in Ukraine during 2000-2011; to compare, there also is a chart of dynamics of Ukrainian banks annual rates. One should keep in mind, though, that inflation rate is provided on the basis of information from the Ministry of Finance of Ukraine. For example, many experts suppose the official inflation rate of 4.6% in 2011 is fiction. In their opinion, this number is to be multiplied 5 times in order to receive true dynamics of consumer prices in the country. This is the first reason why it is not worth placing one’s savings in banks.

commercial banks go bankrupt more frequently than investment funds (ICI) or UITs. Let us give certain examples. In 2010 in Russia 53 banks were deprived of licenses. In 2011 the banking Mecca Switzerland faced similar problems. A number of large banks that were unable to stand European financial crisis had to be urgently saved. The same year 92 American and 21 Ukrainian banks went bankrupt. Isn’t it worth taking a thought?

It appears that the risk is high, and the profit is small. Let us now turn to collective investment. Return here is usually higher, but the result is less predictable. Below follows a return rating of fifteen Ukrainian investment funds during 2011. In this reference, international company Manors Investment is at the top of the rating with the result of 93.6% per annum. As you can see, 12.65% profit per annum is the maximal achievement of traditional UITs. There also are structures that have shown negative return, which means that their clients’ assets have reduced.

Return rating of 15 Ukrainian investment funds

Clients of Manors Investment have earned the average profit of 43% during 2011. Their deposit of $1000 at the beginning of the year has turned into $1431 by the end of it. Moreover, the most conservative deposit of Manors Investment “Classical” managed to generate the profit of 6.52% for its clients during the first two months of 2012: 3.17% from deposit in January and 3.35% – in February.
return. In 2010 the average return of traditional investment funds slightly exceeded official inflation rate and amounted to plus12.7% for open ICIs, plus 14.8% for interval ICIs, and plus 32.5% for closed non-venture ones. This data is provided in the report of Ukrainian Association of Investment Business (UAIB). Manors Investment traders and management have provided the profit of 42% to investors, and of 84% to the Company itself.
According to official data, the average return from collective investments during 2009 has amounted to 21.26%. Let us remind that this was the period of fantastic recovery of price of all assets, which followed a decline during the second half of 2008. This year American stock index S&P has raised almost by 37%, and the increase of domestic stock market has amounted to over 90% (PFTS index). The result of Manors Investment proved most modest – 17.1% of profit to its clients. It is worth mentioning that this was a starting year for the company’s project, for it was moving along unbeaten track. 2008 was characterized by negative return of UITs, which amounted to 30.6%.

This is not surprising, taking into consideration market crash and limited maneuvering of traditional investment funds. Consequently, activity of directors and risk managers of ICI certainly needs improvement. In this reference, it is worth mentioning that management of your capital in UIT has not been cancelled, no matter what the result of its activity is. In other words, there is no certainty at low return.

It is not a secret that for Ukrainian traders and investors the process of entering foreign markets is closely connected with difficulties due to legislation. As a result, illegal or semi-legal means are widely used, with all consequences. Ukrainian legislation provides too little opportunities for traditional UITs to be able to generate high and steady return. In such circumstances Manors Investment seems to be a good alternative.

Manors Investment company is very young, as it has been functioning for 3 years only, but has already reached impressive results. The company was founded in 2007. The project used to be called investment and educational club “Perspective” that taught and provided an opportunity to do new and rather unusual for that time business – trade at stock exchange. Its participants fancied the activity of the club and by the end of 2008 the client’s base was several times larger. In general, the ball was set rolling.

Manors Investment: What are the benefits of trust management?

The principle of PAMM-account (Percentage Allocation Management Module) served the basis for the club’s activity and later for Manors Investment company. Consequently, a certain form of collective investment and trust management is involved. Investments are effected on the basis of broker company ManorsGroupBroker. Therefore, Manors Investment is an alternative to investment funds and UITs. It is even more than alternative, for it is an totally new principle that brings totally different profit. Let us remind that last year’s return of Manors Investment proved to be 7 times higher than the one of most profitable ICI Raiffeisen Bank Aval (second position in the rating).

As informed by Representative of Manors Investment Vladimir Yakubovskiy, the company’s investors are provided with an opportunity to insure their investment from loss, which guarantees certain profit despite the operation results of separate traders. In other words, investors may not have negative return. This is guaranteed by the company’s.

Vladimir Yakubovskiy explained that Manors Investment has formed a range of deposits, which is aimed at different categories of investors, different appetite for profit, and different risk management. For example, there is “Classical” deposit, which is characterized by 100% warranty of safeguard of assets. In such a case, traders take the risk of losing only their funds at the account. Such option is appealing to conservative clients. “Dynamic” deposit is the opposite; it is characterized by high return, but there are risk limitations.

In this reference, as stated by Vladimir Yakubovskiy, high profit of the company as a whole enables it to perform its obligations before clients even if one trader or another has had an unsuccessful trading period. 6 months is the minimal lead time on investment; however traders may take their profit every month without any penalty.

According to Manors Investment, such variety of offers enables clients to create their own diversified deposit portfolio, which will include highly-profitable and conservative investment tools.

“Market Leader” Magazine and Masterforex-V Trading Academy hold a questionnaire at forex forum for traders and investors: Can investment funds be considered the best alternative to banks?
- no, bank deposit is safer;
- yes, investing in investment funds are better;
- it is better to keep money at home.

 

You are free to discuss this article here:   forum for traders and investors

 

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GBPUSD: U.S. Dollar Keeps on Gaining Value against British Pound after BOE’s MPC Meeting Minutes

 

The Bank of England has recently published its MPC meeting minutes. Despite the unanimous decisions made by the committee. some of the MPC members are already eager to consider tougher monetary policies for the Britsh central banks.

 

Publication date: 24 May 03:15 PM

NordFX Names Best Forex Signals in April 2015

 

The Forex market is definitely one of the best and most efficient ways of making money both for rookies and experts in financial markets. For instance, such outstanding opportunities to get a decent passive income are offered by a Forex company named NordFX, which belongs to the most reputable Forex companies in the global Forex brokerage industry.

Publication date: 24 May 02:29 PM

Forex – in What Way and How Much Investors Can Earn

 

These days work at the international currency market Forex is available practically to anyone, even without deep knowledge of finance or high starting capital.
 
This is mainly favoured by two factors: this trading ground is the largest around the globe by daily money turnover and, as a consequence, the most dynamical one. And the last factor “gives rise to” innovative technologies, which increases comfort, reliability, and safety of trade together with increase of gained profit.
 
Publication date: 21 May 02:08 PM

Forex-Market Lets You Get Real Cash From Demo Accounts

 

Have you ever wanted to give binary options a try without investing a penny? Well, Forex-Market is giving you such an opportunity. In particular, the company invites you to anticipate in an unprecedented trading contest where you can win real cash when demo-trading. It is called "A real profit from the virtual account». The winner of the contest gets $1000! Sounds great, doesn’t it?

Publication date: 20 May 02:29 PM

Masterforex-V EXPO Names Best Brokers for Auto-Copying in May 2015

 

As the financial crisis around the globe is building up again, more and more people have to lower their standards of living. People are desperately seeking extra sources of income. Most of them give up since they lack knowledge and expertise in looking for decent investments. Still, there are people who eventually find what they look for. I mean they eventually come to online investments. Investing in those who trade Forex professionally has become one of the best ways to generate truly stellar profits within a relatively short period of time.

Publication date: 20 May 01:23 PM

ActivTrades Gains Respect At MOSCOW FOREX EXPO

When it comes to telling reputable Forex brokers from fakes, experts recommend paying attention to the following factors:
- licenses by major financial regulators
- the company’s expertise
- prestigious awards
- client feedback
- participating in various prestigious Forex expo like MOSCOW FOREX EXPO, for example.

Publication date: 18 May 09:27 AM

Richard Perry from Hantec Markets: MOSCOW FOREX EXPO Was an Exciting Event!

 

Not so long ago, Russia hosted another major Forex event known as MOSCOW FOREX EXPO 2015. A lot of experts from around the globe left positive feedback regarding every single aspect of this exciting show. Indeed, this was an exciting event, Richard perry says. By the way, Richard Perry, is the leading expert in financial market for Hantec Markets. He was an active participant of this event.

Publication date: 14 May 05:21 PM

Roubini: USA Joins Currency War Because Of Strong Dollar

 

The USA is about to join the so-called currency war. It is just a matter of time, some experts believe. One of them is Nouriel Roubini, the famous professor of economics from New York  who predicted the latest global financial crisis.


In particular, he says that because of the current policies launched by Japan and the EU coupled with low oil prices the U.S. Dollar managed to gain a lot of strength against other currencies.

Publication date: 13 May 05:37 PM

45 Traders from Masterforex-V Academy Collectively Gain over 50 000 Points of Profit in April 2015!

 

The 3rd month of tests of the innovative auto-copying system by pro-rebate.com is now over. Now it is time to look at the updated stats for changes that took place over the reporting period.

 


According to pro-rebate.com  and Masterforex-V Academy, the 45 most successful traders managed to show the collective profit of more than 50 000 points! It is interesting to note that the TOP 10 collectively gained 34240 points or 68% of the overall profit. The traders rated 11- 20 gained 4084 points or 8% of the overall profit.

Publication date: 13 May 06:34 AM

Masterforex-V EXPO Names Best Forex Rebate Services in April 2015

 

For starters, let’s find out what rebate is. This is a system designed to give a part of the spread back to the trader. Indeed, this has become a crucial part of the contemporary Forex industry since any Forex trader who is pretty active in trading currencies can save a lot of money on spreads and other fees charged by Forex brokers. When you save money you also contribute to higher profit potential. Even if you a beak-even trader, you can still make money at the expense of rebates. The more active you are in trading, the more money you can actually save and the higher payout you will eventually get from the rebate service you use.

Publication date: 12 May 07:52 AM