The world recession has affected millions of people, and many have lost their pensions and savings; however if you had invested in a forex managed fund, you would be happy with your returns. Let’s take a look at them, and try to understand why the returns are so much better than a traditional stock or bond fund.The forex market has grown exponentially over the last few years.. Back in the 1990′s, trading currencies was the preserve of banks and hedge funds. Today, is a very different story, with every man and his dog opening a forex trading account online, and trying to be the next George Soros, the man who broke the bank of England.
But how should an investor judge a forex managed fund? Well, firstly, and perhaps it is obvious to say, but he should look at the performance figures of the fund But it isn’t that easy – you might think that a monthly return of 10% in one month is good – of course, it is – but not so good when you see that the next month the manager lost 20% of the fund!
The investor should also speak with the manager of the forex managed fund and enquire as to how much leverage the manager is using. Leverage can have a huge impact on a fund’s performance.
The negligent use of leverage is why the vast majority of retail investors lose their shirt in the forex market, and end up investing in a forex managed account. This explains the ultimate attraction of a managed forex account, as we will see below.
But what if it all goes wrong? In practice, you are already quite a lot down on your account, as you need to pay the spread, ie the difference between the buying price and the selling price. You have to realise that as soon as you enter the trade, you are in a loss position, as you need to pay the spread. Then if the market is volatile, you can soon get in a very bad position, lose your shirt, and then start to get sensible and invest the rest of your savings in a forex managed fund.
Therefore the potential client much choose a forex managed fund which is appropriate for his level of risk. If an investor decides he wants higher returns, then he should realise he might lose a part of his capital.. Alternatively, a client who places a higher level of importance to the preservation of his capital might want to look for a forex managed fund which takes lower levels of risk, and which uses lower leverage. To conclude, thus, the investor must find a forex managed fund which fits his comfort levels vis a vis risk, and can maximise his investment goals.