According to an article published in the Wall Street Journal today, "individual investors are pouring tens of billions of dollars into a new generation of complex investment products, and regulators are raising concerns that not all buyers understand the costs and risks.
The products often employ sophisticated strategies that aren't used by traditional stock and bond funds. They include betting against stocks, or shorting them, using derivatives or leverage to amplify bets, and buying unusual assets such as privately issued junk bonds.
The products often employ sophisticated strategies that aren't used by traditional stock and bond funds. They include betting against stocks, or shorting them, using derivatives or leverage to amplify bets, and buying unusual assets such as privately issued junk bonds.
A total of $59 billion poured into alternative mutual funds this year through July, according to Morningstar, making it by far the fastest-growing mutual fund category.
The figure reflects new investments into such funds minus withdrawals. The jump in those seven months was bigger than any previous full-year increase. The alternative mutual funds attracted $25.6 billion in additional assets in 2012".
Wall Street regulators are always "concerned" but when they apply regulations they are always too little and too late.
Source: The Wall Street Journal
