Investment and Funds
Funds and investment
Investment funds are investment instruments that pool the funds of investors and invest it into an investment portfolio that is comprised of bonds, stocks or other assets. Each fund is managed by a person who decides on what market risk management and risk calculations to purchase and sell, and is charged an administrative fee to manage the fund. There are a variety of investment funds. These include unit trusts (UCITS), OEICs and open ended investment companies (OEIGCs).
When investing in funds, it is important to take into consideration the reasons behind why you are investing and also your investment profile, which will reflect your risk tolerance, and the length of time you intend to invest. Younger investors, for example, may have more time to invest and be more willing to take on a higher risk level to ensure that they can grow over the long term.
Diversification is a great method to reduce your risk, just like saving. This means spreading your investment across different asset classes that have less correlation between their price fluctuations in order that a decline in value of a class can be offset by gains in another.
Another way to limit risk is through using’smart beta or low-cost investments. These are funds that are managed by passively that attempt to replicate fluctuations of a particular index of the market such as the FTSE 100, or S&P 500 without the need for judgment.