Funds and investment
An investment fund is a collective investment vehicle that pools the cash of investors to invest in an investment portfolio consisting of shares, bonds or other assets. Each fund has a fund administrator who makes decisions about the items to purchase or sell and charges a management cost. There are various kinds of investment funds. These include unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).
When investing in funds it is crucial to think about the reasons you are doing so as well as your investment profile, which will reflect your risk tolerance, and the length of time you intend to invest. For instance, investors who are younger, may have more time and are more comfortable with a higher risk level to ensure that they can grow over the long run.
As with saving one of the most effective ways to reduce risk is to diversify. This https://highmark-funds.com/2021/03/01/high-end-cybersecurity-of-the-bank-financial-systems involves spreading your investments across several asset classes that have lower correlations between their price movements, so that the fall in value of one class can be offset by gains in another.
Smart beta or low-cost investments is a different way to minimize risk. They are a type of passively managed fund that try to replicate the movements of a specific index of the stock market, like the FTSE 100 or S&P 500 without the need for human judgement.