Investing in unit investment trusts is unwise now, Dankevitch says

6 October 2008 (07:27)

One must admit that investing in unit investment trusts is not a very good idea at the moment. This market is currently not growing at all and is very volatile at the same time, so the trusts’ quotations have recently gone down,’ Otkrytiye Finance Corporation’s CEO Evgeniy Dankevitch said at a press conference devoted to setting up of the company’s office in Yekaterinburg.

Otkrytiye actually comprises Otkrytiye Management Company that runs its own unit investment trusts; incidentally, these trusts’ profitability is currently below the inflation rate and some of them are even bringing nothing but loss to their investors. Even Otkrytiye Bonds, the most profitable of the company’s trusts, only yielded 8% in terms of profit in January-September 2008, which is both a lot less than most banks offer on deposits and below the 10% inflation rate.

In the meantime, the share price of Otkrytiye Shares unit investment trust has gone down by 39.74% since the beginning of the year, that of Otkrytiye Fund of Funds has dropped by 41.9%, and that of Otkrytiye Index MICEX has decreased by 45.3%.

Evgeniy Dankevitch reports the unit investment trust market is expected to expand alongside with the stock market’s general growth as well as thanks to the long-term investors (which are very few in number at the moment).

‘People are now trying to use the unit investment trusts for short-term profit-making and often sustain losses. However, these trusts are actually a long-term investment target, so these are the long-term investments that I would recommend to all those interested,’ Dankevitch observes.

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