A collective investment pools money from a number of investors to achieve a particular objective. This website deals mainly with Undertakings for Collective Investment in Transferableor , generally referred to as investment funds.
They generally hold a large number of different investments and their overalldepends upon changes in the value of these investments. Investment funds frequently measure their against a such as a stock market .
Investing in agives you access to a variety of and a range of economic sectors, markets, countries and currencies. This spreading or of your investment reduces and over time can help smooth out the fluctuations in the value of individual, , equities or other .
Investment funds are managed and monitored by teams of investment professionals. They offer a cost-effective way to benefit fromgrowth and may pay income in the form of dividends or interest. They spread between different investment and reduce investment costs by sharing them between many investors.
While experienced investors may possess the knowledge needed to make their own investment choices, many people are happy to rely on the expertise of a.
Investing directly in the equity or bond market allows you to hand-pick individualor , either alone or with the help of your . However, with direct investments you will probably not achieve the same level of as in an .
Achievingwithin a directly invested can be both expensive and time-consuming. Not so with an , as the costs in a are shared or spread among all its investors. While experienced investors may possess the knowledge needed to make their own investment choices, many people are happy to rely on the expertise of a .
Ancan invest in a variety of financial instruments. As a rule, these include equities, , money market instruments (short-term debt instruments) or other investment funds.
Some funds also invest in specialised instruments such asderivatives as part of their. Other types of funds, which are not covered on this website may invest in other asset classes, such as real estate or private equity.
The investment objective of ais reflected in the types of it holds. Funds investing in equity generally offer higher potential returns, but also higher risks than some bond funds. (also known as « ”) invest in a combination of and fixed-income (e.g. , money market instruments). The individual components are weighted according to the ’s objective, the manager’s view of the market situation and the economic outlook. Traditionally, the financial in which may invest are divided into three categories:
Money markets instruments
Money markets instruments are a type of short-term debt instruments issued by governments, banks or commercial companies to finance working Investors often use money market funds as an alternative to bank deposits, because units or of money market funds can be bought or resold on a short-term basis and they frequently offer higher returns than bank interest rates. Like , money market instruments also provide a fixed rate of interest and the original investment is repaid at the end of the term. Money market funds invest in money market instruments from a variety of issuers in order to achieve a broad of their investments..
, often known as “fixed income ”, are issued by companies, banks or government authorities as a form of debt certificate. They are repayable at the end of a defined period, usually several years, and generally pay a fixed rate of interest. Another type, known as “zero-coupon ”, do not pay annual interest; instead the final redemption amount received by the investor is higher than the initial price they paid for the bond. So-called “floating-rate notes” pay a variable coupon, corresponding to a fixed margin or spread above a interest rate, which may move up and down depending on market conditions.
investors who wish to receive a steady income. Moreover, unless the company or organisation that issued the bond defaults on its payments, the principal amount is repaid in full at maturity.are often assessed by an independent rating agency according to the issuer’s creditworthiness or default . Bond investments are suited for
Many governmentpresent virtually no interest rate or repayment . issued by many reputable companies are also considered to be very safe. Most of them pay a higher interest rate than government because there is a higher that the issuer may be unable to meet interest payments or repay the original principal amount, i.e. default.
Generallyoffer greater price stability than , although their price can also rise or fall according to changes in interest rates.
When a private company decides to list on a, the ownership rights to the company are converted into that can be bought and sold on that . A share represents a portion of the ownership of a public listed company, and collectively a company’s are known as its equity . The individual or institution that owns the share is known as the shareholder, and can receive income from its . Such income is called a “ ”. The amount that is paid out as dividends depends on the profits earned by the company as well as its financial situation and allocation.
The price of a share depends on supply and demand, which in turn are influenced by factors such as the profitability of the company, its long-term business prospects or the general sentiment of consumers and investors. Share prices will often fluctuate, sometimes for no apparent reason, and finding the right time to buy and sell is critical to the success of your investment.
investors such as banks in private deals known as “over-the-counter” (OTC) trades.can be traded on financial markets, including regulated markets such as stock exchanges or, especially in the case of smaller companies, unregulated off-exchange markets. can also be traded between institutional