I'm the dummy

News that a certain fund manager had entered the retirement funding market came as no surprise to one particular fund manager, but what did surprise him was the claim that they were the first.

Now as the reporter on the scene, my first question should have been: Is this a first in South Africa? Instead I took what the presenter said at face value.

And this from a cynic who doesnt believe a word that anyone says, least of all fund mangers that claim that their fee structure is the lowest, that they are performance-based business, or that there are no initial fees on collective investments.

And I also thought that I was observant enough and that my BS detector would pick anything up.

And this is perhaps the problem with most of us either advisors, investors or other people we inherently trust people and believe that what they are telling us is the truth.

Its interesting that a fund manager is entering the retirement funds arena. Interesting, in that there is no baggage that they bring with them; no earlier products that were developed to cater for environments as they were at the time; or markets that looked different to today; or inflation rates that are almost submerged.

Whats also interesting is the number of new entrants into the market the investment market, that is.

There is only blue sky and the ability to make pockets of money, by charging only small administration fees, with performance-based fees the phrase of the day.

There is one little fly in the ointment however - the current market conditions. These are showing returns that for the first month of the year are already near double digits. What happens when the markets turn, as they inevitably do?

Investment professionals warn that the average investor read retail investor generally enters the market quiet close to the peak or at the peak of the cycle. This also seems to be the case for investment professionals looking to provide products for this market.

Some fund managers claim that they are only filling a need from their clients. That they are providing a product, which would be provided by someone else, if they didnt fill that niche. Now thats responsible product development.

The collective investments sector sees this kind of heard mentality on a quarterly basis, where investors get into a market or sector based on the results of the previous sector. Why would anyone make a decision based on information that was at least three months old, I ask you?

As a business person would you pay someone who had accepted a position to work for you, three months salary in advance? I think not.

To me is sounds like a bit of shareholder pressure to capitalise on greed and to a lesser extent stupidity.

What the responsible fund manager should be doing is cautioning their clients that the peak is close and now is not the best time to lock your capital into any kind of long term investment.

And now before you take me at face value, please understand that this shouldnt be construed to be advice. This is my opinion. The opinion of someone who still doesnt know where to invest those left-over bits that I earn.

As my father said: Trust no-one.