Swaps pose new risk for your investment funds

Just when Private Investors would have hoped that a new, more rigorous regulatory regime would protect their assets from careless oversight - or outright fraud - the growing use of swaps by investment managers poses a new risk for the safety of investments. Most Private Investors - and many investment professionals and finance managers - have only the haziest of notions when it comes to the intricacies of swaps (and many other derivatives or 'structured' products) and therefore investors are well advised to obtain help when selecting suitable investment products.

Where is your money slipping into?

An article in Smart Money Magazine asks whether foreign exchange brokers are cheating their clients by using unfair trading practices when executing orders. This could be achieved by taking advantage of small price differences between the time when an order is accepted and when it is executed. The industry term for this is 'slippage' and denotes a practice that prevents a customer from getting a better price than the one promised to him when the order is taken. The difference is pocketed by the broker.
Investors can be deceived whenever they are not careful when monitoring the execution of buy or sell orders in shares, bonds or mutual funds and should take professional advice in order to protect themselves from being taken advantage of.

Operational Risk often neglected

Most investors are focused exclusively on the quest for securing the best financial return on their investments. But recent developments have highlighted the need to ensure the safe return of the investment. Several prominent banks have been found wanting in protecting the confidentiality of client accounts held by their Swiss Branches. While no money was reported to have been lost as a consequence the fact that client records could have been transferred to a CD and the information offered to governments in surrounding states should set alarm bells ringing among investors. If it seems to be easy enough to steal customer data it may not be beyond some criminal mind to transfer money from client accounts. Clients are advised to conduct thorough due diligence on the operations of any bank or money manager they entrust their investments to. Slick advertising, tips from advisers or friends should not be the sole basis of picking a firm.