Investors have been misled into believing that alternative investment mutual funds will deliver short-term positive returns in any type of market conditions. There have been two bear markets since 2000 and the S&P 500 stock index is almost 10 percent lower today than it was in 2000. Investors have not forgotten and are desperately exploring viable investment options. According to John Waggoner (USA Today), investors' fear and loathing of the stock market has resulted in $182 billion in outflows from actively managed stock mutual funds since the bottom in March 2009, and record inflows into various alternative investment mutual funds ("Funds Craft Lures for Skittish Investors"). They include "long-short" funds, which both buy some stocks and sell other stocks short; volatility funds, which bet on how violently the market lurches in one direction or the other; bear funds, which sell short in the belief that markets will fall in the short term; and absolute return funds, which speculate in risky securities like commodities, foreign currencies, and emerging markets.
In the past 12 months, however, the S&P 500 has returned 4.6 percent, but market neutral funds are down 1.4 percent, long-short funds are down 2.7 percent, currency funds are down 5.4 percent, and multi-alternative funds are down 2.6 percent, according to the article, citing Morningstar.
And so, why should investors allow advisors to push them into investments they don't understand, that employ new and untested strategies and the highest fees and expenses? Don't jump into alternative investment mutual funds simply because you're disappointed with your stock and bond mutual funds. If you do, the new alternative investment track record indicates you will only be disappointed!
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
In the past 12 months, however, the S&P 500 has returned 4.6 percent, but market neutral funds are down 1.4 percent, long-short funds are down 2.7 percent, currency funds are down 5.4 percent, and multi-alternative funds are down 2.6 percent, according to the article, citing Morningstar.
And so, why should investors allow advisors to push them into investments they don't understand, that employ new and untested strategies and the highest fees and expenses? Don't jump into alternative investment mutual funds simply because you're disappointed with your stock and bond mutual funds. If you do, the new alternative investment track record indicates you will only be disappointed!
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
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