- May 28, 2024
- Posted by: admin
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Investments and funds
Investment funds are investment instruments that pool the funds of investors and invest it in a portfolio of stocks, bonds, or other assets. Each fund is managed by a person that makes decisions about the type of assets to purchase or sell, and is charged a fee for managing the fund. There are many different types of investment funds. They include unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).
When investing in funds, it is important to think about the motivation behind why you are doing this and how long you’d like to invest for and your investor profile which is a reflection of your tolerance for risk. For instance, investors who are younger may have more time and are more willing to take on a higher risk level to ensure that they can grow over the long term.
As with saving, one of the best methods to lower risk is through diversification. This means spreading your investment across various asset classes that have lower correlations between their price fluctuations to ensure that any decline in value of one class can be offset by a gain in another.
Another way to minimize risk is to use smart beta or low-cost investments. They are a kind of passively managed funds that attempt to replicate the movement of a particular stock market index, such as the FTSE 100 or S&P 500 without the need for human judgment.