Ask The Money Coach

Before now, honestly, I had never heard of Genius Funds. As I am not a registered investment adviser, I do not offer specific stock picks or mutual fund recommendations. What I do try to provide, however, are investing insights and information that will help you make better investing decisions. I did a bit of homework and can share with you what I learned. In summary, I can tell you that if I personally were approached with the opportunity to invest with Genius Funds, I would decline to do so. Read on for more details.

Short Track Record is Strike #1

First, I discovered that Genius Funds (www.geniusfunds.com) manages two investment funds, both focused on emerging markets. One is a stock fund (the Emerging Markets Growth Fund); the other is a bond fund (the World Bond Market Fund). You did not state which fund you bought. In either case, neither fund appears to have an extensive track record as the company just began operation in 2006. Both funds appear to be about two years old, apparently having launched in 2008. That’s Strike #1 for me. You should know a fund’s short, medium and long-term track record. In my view, a longer track record (10 years or more) is better because then you can evaluate a fund’s performance throughout various market cycles (i.e. in up and down markets).

Be Cautious About Promises of Big Returns

Even a routine Internet search to learn about Genius Funds will reveal that there is considerable chatter and debate online about whether or not Genius Funds represent a legitimate investment opportunity – or an outright scam. For me, that’s Strike #2. In fact, some observers have flat out called Genius Funds a “scam” or a “ponzi scheme.” See this article for more details.
ponzischemealert.com/blog/genius-funds-scam-long-term-hyip-scam-and-ponzi-scheme-on-the-verge-of-collapse-exponential-growth-factors-catch-up-to-genius-funds-operations/comment-page-1 This is one reason I always advise investors to do their homework and to carefully investigate any investment opportunity before making a purchase decision. Fees and expenses are also important to know, as are a fund’s objectives. The fund’s objectives should match your own. For example if you are investing for aggressive growth, most of your money should not be in a conservative bond fund.

Finally, how a firm is marketed also matters. Genius promises investors outsized returns or “profits” of 1% to 1.9% daily or 6% to 9% weekly. In my opinion, promises of turbo-charged returns are often major red flags when it comes to investments. That’s Strike #3 for me.

Limit Investment Risk with Research

The fact that you have invested what you described as a “small” amount of money into Genius Funds limits your risk and exposure. Only time will tell whether your investment will pay off. For your sake, I wish you the best. In any event, two great resources in the future for fund information – before you buy – are Lipper (www.lipperweb.com) and Morningstar (www.morningstar.com) Either of these research firms can give you great information and ratings about mutual funds in which you may be interested.

By the way, neither Lipper nor Morningstar had any information about Genius Funds; Apparently, Genius Funds are known as HYIPs, or High Yield Investment Programs. Many financial advisers recommend that investors steer clear from investing money with HYIPs. These are much different than traditional high-yield investments sold on Wall Street, which could be one reason that Genius Funds are not tracked by the major fund research companies. In fact, the Securities and Exchange Commission has said of HYIPs: “These fraudulent schemes involve the purported issuance, trading or use of so-called ‘prime’ bank, ‘prime’ European bank or ‘prime’ world bank financial instruments, or other ‘high yield investment programs.’ The fraud artists…seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs.” For more information on the SEC’s warnings about HYIPs, see this link: www.sec.gov/divisions/enforce/primebank.shtml.

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 Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.