Investment and funds
Investment funds are collective investment vehicles that pool the money of investors and invest it into a https://highmark-funds.com/2021/12/23/market-risk-management-and-risk-calculations portfolio of stocks, bonds, or other assets. Each fund is managed by a person who decides what to buy and sell, and is charged a fee for managing the fund. There are a variety of investment funds, such as unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).
When you invest in funds, it is essential to consider the reasons you are doing so and your investment profile that reflects your risk tolerance, and how long you’re planning to invest. For instance, investors who are younger might have more time to invest and be more at ease taking on a greater risk level to maximize growth over the long run.
Diversification can be a great way to lower your risk, as is saving. This means spreading your investment across several asset classes that have less correlation between their price movements so that a decrease in value of one class can be offset by a gain in a different one.
Low-cost or smart beta investment is another method to lower risk. These are passively managed funds that attempt to replicate the movement of a particular index of the stock market, like the FTSE 100 or S&P 500 without the need for human judgement.