Funds and investments

Investment funds are investment vehicles that pool the money of investors and invest it in a portfolio of stocks, bonds, or other assets. Each fund has a manager that makes decisions about which assets to purchase and which to sell, and is charged fees for managing the fund. There are several types of investment fund, including unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).

When you invest in funds, it is important to consider the reasons behind why you are doing it and also your investment profile, which is a reflection of your risk tolerance and how long you plan to invest. Younger investors, for instance, may have more time and are more comfortable with a higher risk level to maximize growth over the long-term.

Diversification is a great way to reduce your risk, similar to saving. This means spreading your investments across several asset classes that have less correlation between their price movements in order that a decline in value of one asset class can be offset by a gain in another.

Another method to reduce the risk is to utilize smart beta or low-cost investment. These are funds that are managed by passively that attempt to replicate the movements of a specific index of the market such as the FTSE 100, or S&P 500 without the need for judgement.