Investment and Funds

Investments and funds

Investment funds are collective investment vehicles that pool the money of investors and invest it in a portfolio consisting of bonds, stocks or other assets. Each fund has a manager who decides on the type of assets to purchase or sell, and also charges a fee for managing the fund. There are a variety of investment funds. They include unit trusts (UCITS), OEICs and open ended investment companies (OEIGCs).

When investing in funds, it is essential to consider the motives behind doing it and your investment profile that is a reflection of your risk tolerance and how long you’re planning to invest. Younger investors, for instance may have more time and are more comfortable taking on a higher risk level in order to achieve the highest growth over the long term.

With regards to saving one of the most effective methods to reduce risk is to diversify. Diversification is the process of the spread of your money across several classes of assets that have lower correlations in their price fluctuations. This allows you to reduce the value loss in one particular asset class through an increase in another asset class.

Smart beta or low-cost investments is another method to lower risk. These are a type of passively managed fund that try to mimic the movement of a specific index of the market, such as the FTSE 100 or S&P 500 without the need for human judgment.

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