Blog 6: Government banks are failing investors

A recent report from DMP Financial showed that over the past 10 years investing funds in the UK have given a return that is below-average performance. Investors who trust their money to the banks are getting disappointed returns. On the first place we find NatWest that is a part of RBS. 95% of their investments over de last 10 years have produced below-average. This was about 4.9% over the last 5 years and 0.3% over the last 10 years. In comparison to the average funds this produced over the last 5 years 5.9% and 2.5% over the last 10 years.

The Natwest spokesman said that the most of their investors are looking for a safe investment without any risk. A consequence of this state of mind is that the return on this investment is very low. On the other hand Matthew Morris of DMP said: These investment funds have reported over the last 12 months very good returns but these returns are used by the banks to give a bonus to their star people.

I agree with both speakers on a certain point of view. I agree that some people don’t want to invest in funds with a high risk and they want a safe investment. By that they are sure that they don’t lose their savings but on the other hand I also agree that the banks give high bonuses to their star traders. These star traders give a high return to the bank but the little investor doesn’t profit of these returns.

I think that the banks should better give a higher return on their funds and a smaller bonus to these traders. The reason for this is that these traders don’t hesitate to praise a certain share. By praising this share the bank will earn lots of money and pay the trader a bigger bonus. These traders want to gain each time a higher bonus. This has a negative influence on the stock-market like we have seen by the recent financial crisis.

Source: http://www.timesonline.co.uk/tol/money/funds/article7060782.ece