Investment and funds
Investment funds are investment instruments that pool the funds of investors and invest it into a portfolio consisting of stocks, bonds, or other assets. Each fund has a manager who decides on which assets to purchase and which to sell, and also charges an administrative fee to manage the fund. There are various types of investment funds, such as unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).
When investing in funds it is crucial to think about the reasons you are investing, your investment profile which is a reflection of your risk tolerance and how long you’re planning to invest. For instance, investors who are younger may have more time on their side and are https://highmark-funds.com/2021/07/08/generated-post-2/ more at ease with a higher degree of risk to maximize growth over the long-term.
Diversification is an excellent way to reduce your risk, like saving. Diversification means spreading your money over different asset classes with lower correlations in their price movements. This allows you to reduce the value loss in one asset class by the gain of another asset class.
Another way to limit the risk is to utilize smart beta’ or low-cost investments. These are a type of passively managed fund which aims to replicate the movement of a specific index of the stock market like the FTSE 100 or S&P 500, without the need for human judgement.
