Open ended investment schemes are problematic by their very nature. That’s why DevDosh Ltd eschewed their model in favour of a much safer dynamic.
Atop of their inbuilt fragility sits greed. Greed of the individuals that manage the investment vehicles and the greed of the investors. You know the phrase “If something sounds to good to be true, it probably is”? Well that is a somewhat perfect description of an open ended scheme.
Don’t get me wrong. I am not saying they are a poor investment choice. Many are superbly managed and have a solid track record of delivering superb returns to their investors. I am saying however that you should be aware of what you are buying. From a micro perspective you need to have a solid understanding of their pricing as fees can be a touch draconian.
Understanding the product on a macro level is essential also. At first glance the product promises better than bank returns for the same commitment. It’s open ended right? You put you money in, you take your money out, it’s your capital to do as you like with.
But hang on. How does the open ended fund get those better than bank returns? Well they invest your money. So what happens when you want your money out? Does a nice chap at the open ended fund jump onto their trading platform and sell out a fraction of a position and send you a check. Well in the most basic of terms that is exactly what happens.
And that is where the problems begin. You see all the greedy investors that were promised premium returns, from a super safe bond based open ended investment schemes, by a greedy salesmen, working for greedy investment houses have been caught in a bond bubble (other assets also apply).
Yields have been dropping in the liquid sovereign bond market and so fund managers have been participating in the “dash for trash”. Said practice involves hunting out yield bearing instruments and stuffing them into funds to in an effort to deliver promised returns and retain customers. Unfortunately yield often comes at the cost of liquidity thus reducing the the open ended, as convenient as a bank but better than a bank market offering to “you can have your money as soon as I find an idiot to buy these junk bonds”.
The latest manifestation of this abomination is that following a freedom of information act request, which had to be followed up with a demand for an internal review when the FCA were not minded to respond; illuminates that 7 funds are under investigation for such mismanagement of asset allocation.
DevDosh Ltd does not work on this principle. Our investors capital funds one, highly underwritten and secure 1st charge real estate development mortgage. Capital is then returned to the investor at the end of the term. Simple, clean, efficient. If you are an investor looking for the safest 10% yield in the current fixed income market, contact us today.