Complaints about the Swing Fund

My friend told me that the Chinese newspaper publised complaints from several investors about the poor return from the Swing Fund. They earned a miserable return of about 2% after investing for 5 years, or 0.4% per year.

They were promised a product that guaranteed no loss of capital. They were told to expect a better return if the stockmarket did well. In fact, the formula is based on the return from 15 selected stocks.

During the past 5 years, the global stockmarket must have increased by at least 50%. The Singapore stockmarket increased by more than 100%.

In spite of this unusually favourable climate, the investors of the Swing Fund get a poor return of 2%. No wonder, they are very unhappy.

Lesson: Do not invest in complicated financial products that are based on a formula that gives you the worst of a number of selected stocks. One of them will perform badly, and the investor will lose out.

Lesson: Do not trust these products, even if they are marketing by respected banks.