Investments and funds
An investment fund is a collective investment vehicle that pools the funds of investors to invest in a portfolio of bonds, shares, or other assets. Each fund is managed by a fund manager who decides what to buy and sell and charges a management fee. There are a variety of investment funds, such as unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).
When investing in funds, it is important to consider the motives behind doing so and your investment profile that is a reflection of your risk tolerance and the time frame you plan to invest. Younger investors, for example, may have more time to invest and be more comfortable with a higher risk level in order to achieve the highest growth over the long run.
When it comes to saving, one of the best ways to reduce risk is to diversify. Diversification is the process of spreading your money across different types of assets with less correlation in their price movements. This lets you counter the loss in one asset class by the gain of another asset class.
Another way to minimize risk is to use smart beta or low-cost investments. These are passively managed funds that attempt to replicate the fluctuations of a particular index of the stock market, such as the FTSE 100, or S&P 500 without the need to make a judgement.
https://highmark-funds.com/2021/12/23/value-at-risk-calculations-for-market-risk-management/
