All about investment

by: Thomas Kapios

"Window Dressing" Funds In Order to Make them Appear More Valuable

Many banks use the "window dressing" method when they try to sell mutual funds. This is a technique that is often used in order to make something appear much better than it actually is.

An Example
For example, let's say we have stock A and stock B; stock A increased in value while stock B declined. Now suppose the Mutual fund proportionally has a lot of stock B, however. They then sell this stock B and buy more of stock A. This will make people think that the fund is doing really well because stock A goes up. So people fall for this method and end up purchasing a fund that is weak.

In my opinion the best choice:
In my opinion, the best choice that one can make is to buy an exchange traded fund with low expense ratio and no load. (No load means that there is no fee associated with it, it provides a better choice than a high-fee load).

Caution
Allways be careful when you buy a fund in a bank. Always have in mind that you are not required to buy the fund on the spot. The best method is to ask for a prospectus. Go home and review the prospectus, and when everything seems to be in order, you can buy it.

Mutual funds information and tutorial; please take a look if your intrested