Investment and Funds

Funds and investments

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

When investing in funds it is essential to consider the reasons you are investing and also your investment profile, which is a reflection of your risk tolerance and how long you plan to invest. For instance, investors who are younger could have more time to invest and be more willing to take on a higher risk to increase growth over the long-term.

With regards to saving, one of the best methods to lower risk is to diversify. Diversification means spreading your money over different types of assets with less correlation in their price movements. This allows you to offset the loss of value in one class of asset by an increase in another asset class.

Smart beta or low-cost investments is another option to reduce risk. These are a type of passively managed funds that attempt to replicate the movements of a specific index of the market, such as the FTSE 100 or S&P 500 without the need for human judgement.