Investment and Funds

  • AUTHOR: moodsports
  • May 27, 2024
Investment and Funds

Funds and investments

An investment fund is an collective investment vehicle that pools the money of investors to invest in an investment portfolio consisting of shares, bonds or other assets. Each fund is managed by a fund director who decides what to buy and sell and also charges a management fee. There are many different types of investment funds. These include unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).

When investing in funds, it is important to consider the motives behind doing it as well as your investment profile, which will reflect your risk tolerance, and how long you’re planning to invest. For instance, investors who are younger might have more time on their side and are more comfortable with a higher amount of risk to increase their growth in the long-term.

In terms of saving one of the best methods to lower risk is to diversify. Diversification refers to spreading your money over different classes of assets that have lower correlations in their price movements. This allows you to counter the loss in one asset class with an increase in another asset class.

Smart beta, also known as low-cost investment is another option to reduce risk. These are funds managed in a passive manner that attempt to replicate the changes of a specific index of the stock market, such as the FTSE 100, or S&P 500 without the need for judgement.

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