“Smart products, dumb choices”. This is the title of one of BpH’s latest investment insights or whitepapers. The paper looks at two sophisticated and seemingly popular investment vehicles, structured products and hedge funds and provides a cautionary tale about being seduced by either or both.
Structured products appear simple at first, but grow increasingly complex when you dig a little deeper. Hedge funds carry a certain mystery and allure about them yet often fail to deliver. Both expose investors to unknown, unconsidered or opaque risks with considerable performance and risk management challenges. Both sit uneasily in well structured, evidence-based traditional portfolios and better alternatives exist. The fact that they are widely used, does not make them good portfolio building blocks. Nor does it absolve advisers or their clients from deep due diligence, in the unlikely circumstances that they are deemed to assist in meeting long-term investors’ needs.
The paper concludes that structured products and hedge funds are smart products but dumb choices and you should tread with care.
If you would like to receive a copy of our paper please contact us at balance@bphwealth.co.uk