Investment and Funds

Funds and investment

Investment funds are collective investment vehicles that pool the money of investors and then invest it in a portfolio of bonds, stocks or other assets. Each fund is managed by a fund manager who decides on what to purchase and sell and also charges a management charge. There are many types of investment funds, such as unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).

When you are considering investing in funds, it’s important to consider the motives behind it as well as the time frame you wish to invest and also your investor profile, which reflects your willingness to take risks. For instance, younger investors may have more time on their side and feel more comfortable with a higher level of risk in order to maximise growth over the long run.

Diversification can be a great way to lower your risk like saving. Diversification means spreading your money across different classes of assets that have lower correlations in their price movements. This lets you mitigate the loss in one particular asset class through gains in another asset class.

Another method to reduce the risk is to utilize smart beta or low-cost investment. These are funds managed in a passive manner that attempt to replicate the movements of a certain index of the market such as the FTSE 100, or S&P 500 without the need for judgment.