Monday, June 29, 2009

What is Stock Market Window Dressing at Quarter End?

I have received this question from a few via email (as I have been mentioning this issue the last few days). I think this article does a good job of explaining what it is - CLICK HERE

Simple definition though from Investopedia:

Window Dressing
Performance reports and a list of the holdings in a mutual fund are usually sent to clients every quarter. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.

Another variation of window dressing is investing in stocks that don't meet the style of the mutual fund. For example, a precious metals fund might invest in stocks that are in a hot sector at the time, disguising the fund's holdings, so clients really have no idea what they are paying for.

Window dressing may make a fund appear more attractive, but you can't hide poor performance for long.

No comments:

Post a Comment

None of my content is a recommendation to buy or sell any securities.

Please do your own research or consult an advisor before making any investments.