|The big difference between products
and assets is cost
....investments created by the financial services
industry, usually targeted at the retail investor (you and me).
They exist to make things easier for the consumer to access a wide
choice of assets. Ironically, this very factor makes them hard to
assess. Products are created by Providers.
They are difficult to evaluate
....you are investing both in the assets underlying the product
and in the legal and administrative mechanisms layered on top of
the assets. This brings additional issues of;
- risk (do you know how safe is the vehicle
investing on your behalf?);
- management control (how do you know the
managers of your product will continue to do what you thought
they promised to do?);
- liquidity (on what terms can you sell and
can those terms be altered after you have invested?);
- transparency (how do you know what's going
on and/or how do you find out any of the above?);
- and, above all, added costs.
Conventional advice, particularly to the small investor, is to buy
simple products because buying assets directly is hard.
Our advice is completely the opposite. It is
extremely easy these days for the small saver to buy assets directly
and most products are completely unsuitable for any but the sophisticated
investor. If in doubt, don't buy products.