investment funds
TRANSCRIPT
An Investment Fund is a form of collective investment that enables investors to invest indirectly in company shares or other types of investments.
The best investment fund that any investor can invest money in is not a hedge fund. This best investment rarely if ever underperforms the stock market or bond market, is highly regulated to protect investors, and charges low fees and expenses.
The best investment fund for average investors can take the form of a stock fund or bond fund. We're talking about a specific kind of mutual fund here, and these investment funds (mutual funds) are heavily regulated to protect the investing public. Mutual funds are actually investment funds that are designed for average investors.
Each fund has a defined investment goal to describe the remit of the investment manager and to help investors decide if the fund is right for them. The investment aims will typically fall into the broad categories of Income (value) investment or Growth investment.
Income or value based investment tends to select stocks with strong income streams, often more established businesses. Growth investment selects stocks that tend to reinvest their income to generate growth. Each strategy has its critics and proponents; some prefer a blend approach using aspects of each.
The internal workings of a fund are more complicated than this description suggests. The manager sets a price for creation of units/shares and for cancellation. There is a differential between the cancellation and bid prices, and the creation and offer prices.
Investment funds are promoted with a wide range of investment aims either targeting specific geographic regions or specified industry sectors.
Investment Funds Advantages :
Diversity and risk
Reduced dealing costs
Investment Funds Disadvantages :
Costs
Lack of choice
Loss of owner's rights
The major considerations are looked at in terms of the role they play in ensuring that the standard of management of an investment fund is capable of delivering upon its objectives.
Good fund management is fundamental to providing an investment portfolio that is sufficiently diversified in order to mitigate investment risk, as well as stable and opportunistic enough to maximize the returns achieved.
There are many factors which influence whether or not an individual or company can successfully manage a fund and deliver upon its stated objectives.
An investment fund is where the investor contributes a sum of money into that fund, which has already been invested into certain areas of the stock market. The idea is to minimize the risk by spreading the amount invested into several areas of the stock market at once.
Investment funds represent a good way to learn about investing and they are a good investment vehicle in their own right, especially as they are effectively a ready made financial portfolio. They are used by both the seasoned investor and the beginner, and offer value to both.
