So I went and checked for some of them in the above list. Beware of entry and exit fees. For example LU0120694640 (Vontobel Fund - Swiss Money) has an entry fee of 5.00% and an exit fee of 0.30%. It would take years to even get back to were you were.
If you don’t have multiple millions of net worth, paying around 2.00% for premature termination on a savings account, would probably be cheaper, and give higher returns for comparable availability.
Thank you so so much for the reply. Regarding this paragraph particularly, I am still quite confused. If the performance 0.2% for four months continues in the rest of the year, the whole year performance is gonna be like 0.6%. This is still very far from number of YTM, like 1.5% - 1.9%. So apparently there is some basic fix-income knowledge I don’t get.
Seeing YTD performance 0.6% and YTM 1.5%, If I invest 100k and expect to exit after a year, should I expect 101.5k or 100.6k? I know in a savings account, I can expect 101.5k. Essentially I am looking for a savings account alternative, hopefully getting similar rates locked for as long as possible (1 year) by doing it myself. Is the thought too naive?
What I don’t get is how a fund-side entry fee can be dependent on the broker. If my money reaches the mutual fund, they need to buy more securities, regardless where it came from. Or is there some broker-side pooling and netting going on?
At the moment, I just want to know if it’s possible to do so, satisfying my curiosity. Learning some instruments. If the answer is yes, I will then start thinking about when and why and why not to do it
Thank you for the reply. I guess the money market fund is not a good alternative to savings account then? I thought the money market fund generates similar yield to a saving account, trading locked interest for a fixed period to flexibility. Is that wrong?
I am not even thinking about fees yet. Just the performance, should I be happy about the one with YTD performance of 0.2%? It’s the best one I found in the list. Or maybe this is a very bad metrics for money market fund as the policy rates are changing? Should I look at annualized last month return? last week return? Is YTM a good metrics evaluating the money market fund?
Tho compared to fixed term deposit accounts and similar, this isn’t insured.
It’s a fund, so it is not insured but regulated and, unlike bank accounts and short/medium term notes, the fund’s assets must be segregated from the managing company’s funds. I mean, I don’t think it is more “risky” than a savings account, the “insurance” is just done differently.
I mean, I don’t think it is more “risky” than a savings account, the “insurance” is just done differently.
Yes, I wouldn’t be worried about the fund company itself. The issue is if the fund puts the assets in a bank or other company that blows up overnight (CS style).
(It’s really not supposed to happen, at least for the reputable ones, they’d only store the money in good assets with a lot of diversification, e.g. looking at a snapshot for the pictet MMF, the top holding is 2.6% of Japan T-Bill, but then there’s going to be counterparty risk of the CHF hedging, etc.)
But then 2008 tells us things can go badly for MMFs (there’s been more regulation since then, both in US and EU side).