Funds and investment

An investment fund is an collective investment vehicle that pools the funds of investors to invest in an investment portfolio of bonds, shares, or other assets. Each fund is managed by a person who decides which assets to purchase and which to sell, and is charged fees for managing the fund. There are a variety of investment funds. These include unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).

When investing in funds it is essential to consider the reasons behind your decision as well as the time frame you wish to invest and also your investor profile which is a reflection of your tolerance to risk. For instance, investors who are younger may have more time and feel more at ease with a higher degree of risk in order to increase their growth in the longer term.

With regards to saving, one of the best methods to reduce risk is to diversify. Diversification involves spreading your money over different asset classes with lower correlations in their price movements. This lets you reduce the value loss in one particular asset class through gains in another asset class.

Smart beta, also known as low-cost investment is another way to reduce risk. These are funds managed in a passive manner which attempt to replicate fluctuations of a particular index of the market such as the FTSE https://highmark-funds.com/2020/07/27/market-risk-management-a-business-strategy-allowing-to-minimize-the-risks-entailed-in-business-activity/ 100, or S&P 500 without the need for judgment.