Don’t chase. Choose. – A simple way to pick funds without FOMO
In Malta’s tight-knit investment scene, it doesn’t take much for a “hot fund” to become the talk of the Sunday lunch table. But while double-digit returns make great small talk, they can quietly derail long-term plans. Paul Rostkowski unpacks how FOMO (fear of missing out) distorts decision-making – and offers a simple 3P framework Maltese investors can use to choose funds with clarity, not panic.
Picture this: you’re at a family lunch in Sliema when your cousin proudly announces, “I just invested in this tech fund — it’s up 30% this year!” Suddenly, your heart races. Should you jump in, too? After all, who wants to be the only one missing out?
That feeling has a name: FOMO — Fear of Missing Out. And in investing, FOMO is one of the most expensive emotions you can have.
In a world where financial news is instant, WhatsApp groups feel like investment clubs, and markets swing faster than pastizzi sell out at a festa, it’s easy for Maltese investors to fall into the trap of chasing whatever fund is “flying” now. But here’s the truth: chasing yesterday’s winners is one of the quickest ways to get tomorrow’s disappointments.
Why chasing the “hot fund” can burn you
Rushing into a fund because it has gone up recently is like driving while staring only in the rear-view mirror. You’re looking at what has happened — not what’s coming.
1. Markets move in cycles
What soared in 2025 might stumble in 2026. Sectors like tech, clean energy and biotech rise and fall — often right after everyone piles in. By the time the story reaches your Sunday lunch in Malta, a lot of growth is already priced in.
2. You end up buying high
By the time you hear about a fund doing well, the best gains are often gone. You’re buying near the peak, not the starting line. If the market then corrects — as it regularly does — you’re left with an uncomfortable paper loss, and many investors respond by selling at precisely the wrong time.
3. You react emotionally instead of strategically
When FOMO takes over, you’re no longer investing in line with your goals, time horizon, or risk profile. You’re reacting to noise. A friend shares a screenshot, a pundit talks up a sector, a fund appears at the top of a performance table, and suddenly you feel behind.
4. Your portfolio becomes a messy collection of trends
Five tech funds, three bond funds, two thematic ETFs, a crypto play — and no idea what your overall risk actually is. On paper, it looks “diversified” because there are lots of line items. In reality, they may all rise and fall together because they’re exposed to the same underlying risks. In investing, excitement is not a strategy.
The Maltese investor reality
Investors in Malta face a mix of circumstances that can make FOMO worse if it isn’t recognised and managed.
The Malta Stock Exchange is relatively narrow, so most investors can’t get proper diversification by buying a handful of local shares. In practice, many rely on UCITS funds, ETFs and discretionary portfolios for global exposure. That makes the choice of funds crucial: if you’re building your whole investment engine on funds, picking based only on last year’s returns is dangerous.
Word also travels fast. In a small island community, one fund having a good year can instantly become the talk of the office, the gym, or the bocci club. Investment ideas don’t just come from bankers and advisers; they come from neighbours, colleagues and family chats. That social pressure intensifies FOMO. It’s not just “this fund did well”; it’s “everyone I know is in it — why amn’t I?”
On top of this, many investors choose from the limited range of products offered by local banks or institutions and assume these are the safest or only options. In reality, banks provide a curated shelf: some excellent products, some more expensive ones, some that fit specific client segments. “Available at my bank” is not the same as “right for my goals” or “the only way to invest”.
Finally, private equity, private credit, infrastructure and other alternative strategies are becoming more accessible through licensed advisers and platforms. They’re still less widely understood, so without proper guidance, investors may either ignore them entirely or rush in for the wrong reasons.
The 3 Ps: a simple framework for choosing funds
You don’t need a finance degree to pick funds sensibly. You need a framework.
Think of this as your investment recipe — easy to follow, repeatable and calm. Call it the 3 Ps: Purpose, Profile, Plan.
1. Purpose — start with your “why”
Before picking any fund, ask: “What am I investing for?”
Your purpose shapes your portfolio. The same fund can be perfect for one person and totally wrong for another.
Saving for a home in 3–5 years requires stability and liquidity, not aggressive equity risk. If retirement is 20+ years away, growth matters more than short-term drops, and you can tolerate more volatility. For children’s education or general long-term wealth building, you want a mix of growth, income and diversification.
Investing without clear goals is like sailing without a compass. You might stay afloat, but you won’t know where you’re going — and any wave of FOMO can knock you off course. Once your purpose is clear, every fund you consider has to answer one question: “Does this help me move towards that purpose?” If not, it’s noise.
2. Profile — how much risk can you really handle?
Your risk profile is not just a questionnaire your adviser makes you fill in. It’s a mix of time horizon, financial capacity for loss, emotional tolerance for volatility and your responsibilities — children, mortgages, business commitments, health considerations.
If a 20% market drop keeps you awake at night, an aggressive portfolio is not for you, no matter what your friends are buying. If you’re young with time on your side, being overly cautious may significantly limit your long-term growth.
In Malta, many investors lean conservative, which is understandable — we’re a small market and people worry about capital loss. But sometimes that caution goes too far: all cash deposits, no inflation protection, and a belief that “if I don’t lose anything, I’m winning”. In reality, inflation quietly erodes purchasing power.
The goal isn’t fear or bravado. The goal is balance. Enough risk to grow your capital over time; not so much risk that you panic and sell at the worst moment.
3. Plan — build the core first, then add the fun
Imagine building a house. You start with the foundation, not the furnishings. Your portfolio works the same way.
Your Core should generally consist of a global equity fund, a global bond or flexible income fund, a balanced multi-asset fund and one or two diversified UCITS ETFs. This core gives you sensible growth, income potential, stability and global exposure in a handful of positions.
Only once this foundation is in place should you think about Satellite ideas: thematic ETFs (AI, robotics, clean energy), emerging markets, sector-specific funds, high-yield or alternative strategies. Satellite positions are where you express views, interests or higher-risk ideas — with small allocations that won’t derail your long-term plan if they disappoint.
Most Maltese investors do this backwards — they start with the satellite ideas and skip the core entirely. A good portfolio isn’t 10 flashy things. It’s one or two solid things and a few supporting additions.
Two questions that can save you money
Whenever you feel tempted to buy a fund because “everyone is into it”, pause and ask:
“Would I still buy this if nobody told me about it?”
“Would I still buy it if I couldn’t see last year’s returns?”
If the honest answer to either question is “no”, your decision is being driven by FOMO, not strategy.
In Malta’s small market, popularity can create a lot of noise. Don’t confuse what’s trending with what’s suitable for your goals.
Stick to regulated products such as UCITS funds, ETFs and MFSA-approved funds, which provide transparency and investor protection. And remember: professional guidance is not just for the ultra-wealthy — even smaller investors can benefit from structured advice that helps maintain discipline and long-term focus.
Keeping FOMO in check
If you want a straightforward process, it’s this: write down your goal in numbers and years, choose funds that match your risk profile instead of the latest story, and review your portfolio periodically rather than constantly. Markets move every day; your life plans don’t.
The calm investor advantage
The best investors are not the ones who chase the most ideas. They are the ones who make thoughtful, consistent choices and ignore the background noise.
In a fast-moving world filled with hype, trends and constant alerts, staying calm is not a weakness; it’s a superpower.
Don’t chase. Choose.
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