Things every investor should know about Bond Funds:
Following are few things that every investor should know about Bond Funds:
Diversity is the key to success when it comes to Investment Funds. The Bond Funds offers the element of diversity to its investors. There are different types of Bond Funds available in the market which includes both Government as well as Corporate Bonds. The investor is free to choose the type of Bond Funds he wants to go with.
Easy to sell:
While entering the stock market, every investor thinks about the safe exit as well. There are a lot of investment funds that do not allow the investor to quit whenever they want. However, Bond Funds standouts them all and are very easy to sell which means that the investor can sell his share and exit the market.
Risk of interest rates:
In most types of investment funds, the interest rate rises as the price of the share rise, however, not in Bond Funds. The interest rate has a reverse relationship with the price of the share which means when the price of the share increases, the interest rate goes down.
While the Bond Funds are easy to sell, however, there is a risk in it as well. When someone plans on selling his share, he will revive the current NAV, Net Asset Value of the share i.e. the total value of fund’s holding which is divided by total number of the fund shares. If the current NAV is lower than the day you bought it, you will be in loss.
9. Stock Funds:
A Stock Fund also known as Equity fund is type of investment fund that lets the investor to invest in the stocks. The Stock Fund is similar to Bond Fund. People who want to invest but not directly by buying a stock from the stock market prefers to go with the Stock Funds. The Stock Fund is also managed by the fund managers.
What is Stock Fund?
The Stock Funds are directly related to each other. Investors who prefer to invest in stock but by investing in the pool funds collected by other investors are inclined towards Stock Funds. The Stock Funds are managed by the fund manager, who invest the investors money in the stock market (Kang, 2010)
Why Stock Funds?
The Stock Fund is the perfect investment option for people who want to invest in long term benefits. The Stock Fund offers long term growth rather than only focusing on the income. The fund manager finds the stock that has most rapid growth in the market and then invests the pool of investments in that specific stock (Kang, 2010).
Things everyone should know about Stock Fund:
Following are few things that every investor should know about Stock Fund.
Increase in cash dividend:
Investing in the Stock Fund is not only beneficial in the long run but there are short terms benefits as well. The profit of the Stock Fund not only increases every year but it also increase the cash dividend which means makes it one of the best type of investment funds to invest in (Jay D. H., 2013).
The diversification is also a key factor of the Stock Fund. Diversification allows the investor to invest in more than one thing which means he will get benefits from more than one thing. The Stock Fund completely fits this requirement of the investors all over the world.
Taking about the let down of the Stock Fund, one cannot ignore price fluctuation. There are different types of stocks in the market and unfortunately all of them lack in stable price. There are different market factors which leads the Stock Fund price to fluctuate every now and then.
Tax and fess:
A common drawback which is almost part of every investment fund is the tax and fees. Since the Stock Fund is managed by the fund manager which means that you have to pay his heavy fees. Moreover there are other fees that every investor of the pool funds has to pay every year which reduces the yearly profit.
10. Alternative Investment Funds:
The Alternative Investment Funds is different type of investment funds. It is not a conventional type of funds such as bonds, cash and stocks. Basically an Alternative Investment Fund can invest in everything, in fact many Alternative Investment Funds invest in (or with) automated trading strategies and in derivate investment vehicles. Some Alternative Investment Funds even have banks issuing special derivate for their investment. There are different limited regulations of investments due to the complex nature of the Alternative Investment Funds which is why they are slightly more popular as compared to other type of investment funds.
What is Alternative Investment Funds?
The term Alternative Investment Funds due to its complex nature is defined as investment product. The Alternative Investment Funds differs from other type of investment funds in terms of the low correlation, use of huge variety of techniques and dynamic strategies of trading. The special features of the Alternative Investment Funds make it popular among different types of investors (Archerselevators, 2015).
Asset management world:
Recently the Alternative Investment Funds has captured the spot light in the world of asset management since the interest rate has increased the correlation between bonds and stocks. The buzz around Alternative Investment Funds is increasing and asset management has offered dedicated information about Alternative Investment Funds as the distinct class (Insight, 2014Insight, 2014).
Alternative Investment Funds and Fund Managers:
One of the most important things about the Alternative Investment Funds is to channel the investment flow. Since the Alternative Investment Funds are managed by the fund managers, which is why it is important for them to make sure that the investment flows in different but huge range of the opportunities. To meet the needs of the client it is important that the fund managers of the Alternative Investment Funds must be ready to adopt flexible operating and business models (Mellon).
Alternative Investment Funds and Future:
For over three decades the industry of Alternative Investment Funds has evolved and became a very important part of global economy and financial system. The growth of the Alternative Investment Funds industry determined to range of the external factors with some regulatory changes, technological development and economic cycles, all plays very important role. When it comes to future of the Alternative Investment Funds, it is also affected by macro factors, monetary policy and ageing in some of the developed economies (Forum, 2015).
Forex managed Funds for example are under the category of alternative Investment Funds. As most Forex is not traded at regulated Exchanges the Forex Fond Manager can basically make every price for the customer or his Forex Fund. The development of the Forex Fund is totally in the hands of the (unregulated) Broker and the (unregulated) Exchange while every Dollar which the investor loses the Broker and Exchange wins. This is even written in the terms of most Forex managed Funds if they are sold in a regulated Country like the USA. If an Investor invest in a Forex Fund in a non (or nearly non) regulated Country the investor is totally in the hand of the Forex fund operator.
Another special case of the Alternative Investment Fund is the Hedge Fund. Hedge Fund have started as funds which hedge (or secure) positions. For example they bought some stocks and they hedged (secured) the stocks with options against losing in value. In the 80th many Hedge Fund Managers were able to magically have outstanding results even when the market was down. Other types of alternative Investments are Commodity Funds, which invest in exchange traded commodities like Softs (Wheat, Corn, Hog, Milk, Cattle), Metals (Iron-Or, Gold, Silver, Copper), Energy (Crude-Oil, Heating-Oil, Gasoline, Natural-Gas) or even exotic things like Volatility.
11. ETF Funds
One of the lowest risk carrying type of investment funds is Exchange Traded Funds, commonly known as ETF Funds. The popularity of the ETF Funds has increased to a huge amount in last decade and it still garbs the attention of the investors. There are a lot of factors involved in the popularity of the ETF Funds which includes their simplicity (Calicchio).
What is ETF Funds?
ETF Funds is basically a security that tracks bonds, index, commodity or even a pool of assets. The ETF Funds trades more like a common stock. The prices of the ETF Funds do fluctuate the entire day i.e. the day it is bought or sold. It is known as attractive alternative among the individual investors.
Why ETF Funds?
The reason people prefer to go with ETF Funds is that in comparison to the index or mutual funds, the ETF Funds are fairly less expensive. Moreover, there is no need to frequently manage the ETF Funds like other regular funds which is why the investor usually end up paying less amount of fees for the management of ETF Funds(Whelton, 2013).
Things every investor should know about ETF Funds:
Following are few things that every investor should know about ETF Funds:
The best thing about the ETF Funds is that they are extremely transparent. The investors have an idea of what he should expect with the ETF Funds. The fact that the price of the ETF Funds will keep on fluctuating entire day remains true. The investors of the ETF Funds do not get unpleasant surprises at the end of the day.
The ETF Funds are usually available in almost all the sectors which includes the precious metals (metal ETF) health care and so on. The easy availability of the ETF Funds is one of the key factors behind the huge popularity of this type of investment funds.
Can be limited to Large Companies.
There are some countries where the investors have a limitation of the large cap stocks due to the narrow stock in market index which means that only large stocks will be able to limit available exposure to small or mid-cap companies. This can result in making ETF Funds out of reach for some investors.
There are some ETF Funds which are double or sometimes of triple leverage, can possibly result in losing double or even trip tracked index. If ETF Funds are help for more than one day, there are a lot of chances that the investors have to bear double or triple loss.
12. UCIT Funds
The Undertakings for Collective Investment in Transferable Securities, commonly known as UCIT Funds, are the type of funds which are licensed for the Swiss as well as European Investors under harmonized regulatory regime.
What is UCIT Funds?
UCIT Funds is basically a framework of European Commission which creates harmonized regime all around the Europe to manage and for the sale of the mutual funds. The UCIT Funds are to be registered in the Europe. However, the investor can sell them worldwide by using the unified regulatory as well as investor protection requirement.
Things every investor should know about UCIT Funds:
Following are few things that every investor should know about UCIT Funds:
UCIT Funds is a good option to go with for the retail investors around the globe since the standard of the disclosure remains intact and investment guidelines for funds also remain on a consistent level.
Even though UCIT Funds constrains the investor to a certain extent when it comes to making their own choice of the investment to go with, however, the strategies that are able to fit with requirements are extremely transparent under the EU laws.
It is strongly advised to European investors to only invest in UCIT funds or funds which are "tax transparent" according to their countries legal and tax systems. Many European countries have punishment taxes for investments in non-tax transparent funds. In addition to this many non-European countries like the US have a withholding tax for foreign investors under which they keep for example 30% of the dividends. This withholding is only paid to investors who make a tax declaration in these countries, for example to receive the US withholding tax back (or at least a part of it) you would have to hire a US tax advisor and pay between 1000 to 2000US $ to get a part of the withholding tax back. In many cases it is not just about the 1000US $ but more about the work associated with it.
Summary: Most funds are pooled investments
Get your money managed with leading scientific models
Check out our scientific approaches