Investments and funds
An investment fund is an collective investment vehicle that pools the funds of investors to invest in an investment portfolio consisting of shares, bonds or other assets. Each fund is managed by a fund director who decides what to purchase and sell and also charges a management charge. There are many kinds of investment fund, including unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).
When you invest in funds, it is crucial to consider the motivation behind why you are doing this and how long you’d like to invest and also your investor profile that defines your tolerance to risk. For instance, investors who are younger might have more time and are more comfortable with a higher amount of risk in order to maximise growth over the long-term.
As with saving one of the best methods to lower risk is to diversify. Diversification refers to the spread of your money across several asset classes that have less correlation in their price fluctuations. This lets you counter the loss in one asset class by the gain of another asset class.
Low-cost or smart beta investment is another way to reduce risk. These are funds managed in a passive manner that attempt to replicate the changes of a specific index in the stock market like the FTSE 100, or S&P 500 without the need to make https://highmark-funds.com/2021/12/23/market-risk-management-and-risk-calculations/ a judgement.
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