Need assistance responding to this discussion question post in a personal opinion whats a personal thought on this post

A couple of years after starting my business, I opened a SEP retirement account. As the account slowly grew, I had to make decisions regarding investments within the account. Although I put some money into mutual funds, I also wanted to buy and sell stocks in an attempt to get a higher return. As I explored the vast array of possible stocks in which to invest, my eye was consistently drawn to travel related stocks. This was not because I had reason to believe the travel industry was the best investment, but rather because I travel constantly, keep up with the industry, and am quite familiar with the relevant companies and their strengths and weaknesses. This familiarity gave me a false security that investing in these companies was my best option. Although I did well on some trades, overall it did not prove to be a great strategy, and when the pandemic hit, my portfolio was disproportionately effected because of the lack of diversification.

In the above case, the managers of Minco's fund are making the same mistake I made. They are confusing their familiarity with an industry for a safe and profitable strategy. Although a number of critiques can be leveled, two in particular stand out. First, superannuation funds need to be stable, predictable investments, because a large number of people are relying on them for a stable income source during retirement. Getting the maximum return is less important than getting a stable return. For this reason, regardless of the particular strategy employed, diversification is key. If 2020 has reminded us of anything, it is that the future is highly unpredictable, and as a result it is key to spread risk across a variety of industries and investment types. This minimized the possibility that disruptions in a particular industry will prove disastrous. Minco's fund managers are putting their retiree's financial stability at risk by investing the majority of the fund in one sector. The second mistake the fund's managers are making is to tie the fund's financial success to the company's financial success. By investing in the same industry that the company operates in, the fund is running the risk that it's returns will drop at the same time that the company is unable to make up the difference. Imagine two possible scenarios. In one, the company is doing poorly and needs to downsize. They want to offer an early retirement package as a means of downsizing while still taking care of their employees. In this scenario, they need the fund to be doing well so that in can absorb the additional retirees. In the second scenario, the fund has taken a financial hit due to poor performance of their investments. In order to be stabilized, the fund needs an infusion of cash from the company. In both of these scenarios, the current strategy would cause both the company and the fund to struggle simultaneously, preventing either from being there when they were needed by the other.

In conclusion, Minco's fund managers need to reevaluate their investment strategy. Instead of following the path that feels comfortable, they need to invest in a widely diverse set of investments that are market research driven and as shock proof as possible.