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High Yield Investments
If you want a high yield investment you need to
take into account several factors to see if the investment is likely to hit
your target growth.
This article will tell you what to
look for in terms of picking a high yielding investment manager that could give
you 30% + annual profits.
Risk, reward & management
The
fact is, most high yielding investments disappoint and this is generally down
to the management – Not trading conditions.
Many managers blame
the market, but that is simply the same as a bad workman blaming his tools.
To get a high yielding investment, you must be prepared to take a risk,
as of course with risk goes reward. The greater the risk the greater the
reward, however management of the investment is crucial.
The market is
same for all asset managers, but they don’t all have the same success in
fact: Most discretionary mutual, futures and hedge funds produce poor returns.
They always seem to do well and when you invest the performance dives!
If you make sure you check the points below your chances of your high
yielding investment performing will increase dramatically.
1.
Consistency Of performance
On any investment it’s easy sometimes to
have short periods of high performance if the market is “easy to
trade” i.e. strong trends are present.
Make sure you judge the
investment over a three to five year period, to cut down the influence of luck
and see how the management performs over a wide variety of trading conditions,
not just strong trending markets.
2. Conflict of interest &
Fees
Fees add up. Make sure to check the performance figures you see
are net of all fees.
Look at all fees and their impact on results
given.
If possible, look for a manager who does not get paid a
proportion of the dealing fees. This creates a conflict of interest between
generating revenue and what’s best for client profits. This conflict of
interest is a major reason for fund managers failing.
The fact that a
manager earns fees means he is likely to trade more and create a commission
impact on profit.
3. What is the managers previous performance on
ALL funds
Many asset managers simply put forward their best performing
account.
You need to look how all funds under their management have
performed overtime. Make sure you look over 3 – 5 year periods as a
minimum.
4. Method of trading
Try and find out about the
methods that are being used to trade your funds.
Generally, the top
performing managers will use a long term disciplined technical approach to
trading, which aims to liquidate losers quickly and run the big profitable
trends.
If you are investing in high yielding investment that is aimed
at producing higher returns the method of trading is crucial. You need to be
confident in its ability to make returns longer term, so you have the
confidence to stick with the system or manager during losing periods.
5. Drawdown to profit
Look at investment in terms of drawdown
as well as profit, as any high yield investment looking for higher returns will
have them.
You therefore need to look at performance in terms of
severity and length of drawdown. For example, if an asset manager produces
gains of 60% with a 50% drawdown and another does 40% with a 15% drawdown, the
latter is probably the better from a risk / reward point of view.
You
also need to look at the length of drawdown in terms of peak to valley. If you
invested at the worst possible time, how long would it take for you to reach a
new high in equity? Some time spent checking the above will be time well spent.
Picking a high yield investment that is right for you is a case of
checking all the above facts If you do, it will increase your chances of
success dramatically.
Learn More about a Legendary Trader
Why not attend one of our FREE Seminars held in London and cheshire.
click here to book on-line or telephone 0161
285 4488.
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