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It's a conundrum. Are mutual funds worth the money they charge? Do they provide service at a reasonable price, or would you be better off investing through index instruments, ETFs, or in short - anything that doesn't charge high fees?

One thing's for more, mutual fund managers are mavens at marketing.

Note the tremendous surge of ads in the last few days. No more generalized "branding" campaigns lauding the skills of the mutual fund manager and the fund's past performance. No: these latest ads hit where it hurts and call on you to take action.

The place the public is hurting is the low interest they get on deposits and short-term certificates - makams.

The most you can get on a fixed-income deposit these days is 2.5% to 3%. Interest on makams is only slightly better: a one-year makam delivers 3.3% while a 3-month makam serves up 3%. Not that long ago the public had been getting up to 10%. It's tough.

"Your Series 617 makam comes due tomorrow," the mutual funds shriek in ads. "You'll have cash. Come invest it with us! We have a range of funds to offer you - fixed-income, bond funds, lots of lovely things."

We did a count. Yesterday TheMarker had no less than six ads like that, from six investment banks. Each bought a whole page. Some ads directly attack makams and short-term deposits (pakams). Ilanot Batucha ran a picture of a tortoise, which was advancing at the pace of your returns.

But many of these ads mislead the public, by implying that their mutual fund is equivalent or alternative to a fixed-income deposit.

A deposit at the bank (pakam) or at the Bank of Israel (makam) is a short-term investment vehicle that is 100% liquid, 100% safe and that involves zero management fees. It is  basically cash on which you're receiving interest. That is why many people view makams and pakams as a sort of short-term parking place for cash, for a few months, not as a real investment.

Mutual funds on the other hand are a completely different animal. They are portfolios with a wide range of dozens, sometimes hundreds, of different securities that are actively managed by people who charge a lot of money for their management services.

Moreover, in many of these mutual funds ostensibly offered as a substitute for solid-as-a-rock makams or pakams, you'll find a lot of very non-solid investments.

Solid? Not exactly

Prisma for example suggests that the public replace their 617 series makams with Prisma 10-90. Which is what? Which is a lot of bonds - and also shares in a bitty little company named Aviation Links (Kishrei Teufa). Prisma 10-90 had placed 0.63% of its assets in that unknown company (according to the figures for March).

In fact, a good look at Prisma 10-90 shows nothing rocklike about it at all. It had placed 45% of its assts in government bonds, which can lose ground, and a lot of it. All the rest had been placed in shares, corporate bonds and convertible bonds.

Excellence-Nessuah's ad is just as fascinating. There we see a giant picture of chief investments manager Gili Cohen who explains that you can use the money from your makam coming due to get into Excellence-Nessuah 85/15, because "the level of investment in shares suits the solid investor". How solid? Eleven percent of EN85/15's assets are in Israeli shares (0.5% are in Teva Pharmaceuticals (TASE, Nasdaq: TEVA)), 27% are in corporate bonds, including 1% in Atzmon, which is a structured deposit that Excellence-Nessuah itself issued, and more assets are in options on the shekel-dollar exchange rate and in long-term bonds.

Cohen boasts about the 8.9% returns that EN85/15 achieved from the start of the year. But we promise you this.

The returns on makams are safe as houses even if the stock market tanks. But when the downturn comes, EN85/15 is going to lose money, a lot of it. We also promise you that Cohen is going to charge you 1.6% of the assets you deposited, each year, whether the market is rising or falling.

Investors may venture some of their assets on risky instruments, hoping to improve returns beyond single low digits. But watch out for emotional decisions driven by frustration at the low rates on makams, and ads that screech about gorgeous past returns but that say nothing about future potential.

If you absolutely don't want to lose money, stay with the makams. Move your money from the makam that comes due to a new one. And if you want to add some bonds and shares to your portfolio, do it through ETFs.