Funds and investment

An investment fund is a collective investment vehicle that pools the funds of investors to invest in an investment portfolio that includes bonds, shares or other assets. Each fund is managed by a fund director who decides what to buy and sell and charges a management cost. There are many different types of investment funds. They include unit trusts (UCITS), OEICs and https://highmark-funds.com/2020/07/27/market-risk-management-a-business-strategy-allowing-to-minimize-the-risks-entailed-in-business-activity open ended investments companies (OEIGCs).

When investing in funds, it is important to think about the motivation behind why you are doing this and the length of time you’d like to invest and also your investor profile, which reflects your tolerance for risk. For example, younger investors may have more time and are more comfortable with a higher amount of risk in order to increase their growth in the longer term.

Diversification is a great method to lower your risk like saving. Diversification refers to spreading your money over different asset classes that have less correlation in their price fluctuations. This allows you to counter the loss in one class of asset by an increase in another asset class.

Another way to minimize risk is through using’smart beta or low-cost investment. These are fund that is managed passively and tries to replicate the movements of a particular index of the market, like the FTSE 100 or S&P 500, without the need for human judgement.