Beginners Guide to Managed Funds

What is a fund?

Funds are an easy way to invest your money no matter whether you are new to the world of investing or have been in the game for years. They are a convenient way to diversify across a various amount of investments and give you access to the experience of a professional fund manager who will be able to help you with all of your fund related questions and queries, you can find fund managers at websites like FundCalibre who will give you all the information you need about funds.

A fund will gather money from a large amount of different investors who will trust the fund manager to invest it on their behalf. You can choose to invest in various types of types of assets such as shares, bonds or property.

Types of funds

  • Open Ended Fund – Which allows you to buy and sell shares of the fund at any time without penalty. They may offer new shares of the funds at any time to users.
  • Closed Fund – Which offers the opportunity to purchase shares in the fund when it first opens. If you want to sell the shares at some point, you do at a discounted price that is usually lower than retail value for what you have in the fund.
  • A Bond Fund – Which usually invests in one or two of the various types of bonds. These can include government bonds and junk bonds.
  • Money Market Fund – Which invests in securities and works to keep the shares at a value of about £1 each. They are open-ended funds, and some people will use them similarly to savings account.
  • Stock Fund – Which mainly trades in different shares of companies. A good fund will diversify the shares over several different types of companies to help reduce the risk

How to choose a fund?

Decide where you are going to allocate your assets first – how much are you going to invest in equities, bonds, property etc.

Now choose what mixture of funds you want within each asset.

Even within each sector, there are a wide variety of investment styles and methods. For example, within the UK equity asset class, special situations, recovery funds or those with a small or mid cap bias are likely to outperform in rising markets. Although, they may well lose more money in falling markets. Large cap biased funds and equity income funds tend to do better in more difficult markets.

Decide these sorts of things before you even look at any fund data. Write it down so you can compare any funds you identify against your criteria.

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