Dubai Forums Dubai Business Dubai Business Talk

Hello,

I am from Indonesia, interested to buy Dubai mutual fund. Where can I buy?

Thanks.

I say avoid mutual funds. Why? It's a complicated product. The firm knows all the ins and outs and you know nothing. Easy for them to manipulate things in their favor without your having a clue. Even if you are on top of things and wish to challenge their practices, what are you going to do? Get help from a UAE consumer protection agency--they don't exist. Hire a lawyer--do you really have enough money for that?

I'll give an example. When you are ready to cash in your account, you submit the application to do so. What happens? You wait weeks, even up to a month before receiving your payment. In the meantime the market is on a slide. Your mutual fund company just sits on your investment waiting as long as possible to cash it in for you, thus minimizing the payout they have to make to you. Stocks as we all know are fickle and can go up and down two or three percent in a day. When an account is cashed in can make a difference of thousands of dollars in the matter of a single day. You can lose thousands of dollars just like that, after patiently investing thousands of dollars over years.

The problem with mutual funds is you have no control over what happens with your money. No control whatsoever. Stock investing is all about timing, but all you as a mutual fund investor are allowed to do is submit applications and wait weeks for any action to be taken. This is ludicrous from the perspective of investing in stocks.

upandhi wrote:I say avoid mutual funds. Why? It's a complicated product. The firm knows all the ins and outs and you know nothing. Easy for them to manipulate things in their favor without your having a clue. Even if you are on top of things and wish to challenge their practices, what are you going to do? Get help from a UAE consumer protection agency--they don't exist. Hire a lawyer--do you really have enough money for that?

I'll give an example. When you are ready to cash in your account, you submit the application to do so. What happens? You wait weeks, even up to a month before receiving your payment. In the meantime the market is on a slide. Your mutual fund company just sits on your investment waiting as long as possible to cash it in for you, thus minimizing the payout they have to make to you. Stocks as we all know are fickle and can go up and down two or three percent in a day. When an account is cashed in can make a difference of thousands of dollars in the matter of a single day. You can lose thousands of dollars just like that, after patiently investing thousands of dollars over years.

The problem with mutual funds is you have no control over what happens with your money. No control whatsoever. Stock investing is all about timing, but all you as a mutual fund investor are allowed to do is submit applications and wait weeks for any action to be taken. This is ludicrous from the perspective of investing in stocks.

what then do you recommend for people who have spare money to invest if not stocks and mutual funds in Dubai? thanks

Mashreq Bank offers fixed deposits for as short as 1-week with 4% annual rate of interest and around 5% for a 1-year fixed deposit. It's not a whole lot but its sure and simple and you have 100% control. Other banks may have similar products with similar rates.

Secondly, while I don't recommend mutual funds because you are at the mercy of the fund manager, I don't have a problem with investing in individual stocks if it can be done in such a way as you can get on the phone and say "sell" or "buy" and that will be done for you in real time. For me the issue is control and awareness. It isn't hard to be aware of what's going on with one or a few individual stocks you've selected to invest in.

The idea behind mutual funds is that you have a very knowledgeable portfolio manager who can wisely invest for you across a range of funds. But the catch is this fund manager isn't you, it isn't your brother, your cousin or your best friend. Who's to say that with all their wisdom they aren't going to get the better of you and your money. The product they selll is so complex that even an expert will have trouble determining if the product is fair or not.

At least in a setting like say the USA, you have some private and gov't institutions looking out for the well-being of consumers. Even so, fraud and manipulation still occurs. But there are no such regulatory agenicies in the UAE. You do have government licensing which certifies the businesses that carry out such trade, but again I say, due to the complex nature of these products, one has to wonder if the government here is actually capable of competently evaluationg these firms and their products.

So, keep it simple. Learn a bit about how the stock market works, research a couple or a few firms and then begin placing a limited amount of funds in such stocks. In the meantime, as you figure things out, keep the balance of your funds in a fixed deposit like Mashreq's.

Check this out and let me know what you think.

I know this is only available for UK and Ireland Residents, but let me know what you think of the idea.

visit www.incl-online.co.uk , enter site then goto FPI section on the homepage

Regards,

thanks upandhi

hi uphandi,

does all mutual funds in UAE have their underlying assets in equity / stock? is there any funds that invest in government's bonds, foreign exchange, etc?

do you know where to get the list of mutual funds available in UAE along with their subscription & redeem fee, net asset value, and so on?

thank you.