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Understanding Investing 简体中文网页 Members section

Investment Approaches

Investment objectives

Regardless of whether your investment objective is capital preservation, capital growth or a steady income stream, you will surely find a fund that corresponds to your goals from within the universe of UCITS funds as a whole. All investment funds offer a clearly defined investment strategy and performance goal. This goal could be, for example, to generate attractive returns, outperform a specified market or just follow the performance of a specific index. Managers use portfolio construction, asset allocation and security selection to provide you with a balance between safety, growth and income that is in line with an investment fund's investment goal. By determining your risk level and return expectations, you can select your investments to match your investment profile.

Capital preservation

There is no such thing as a completely safe investment, but funds that invest wholly or predominantly in bonds issued by established governments are largely protected from the risk of default. Other types of asset favoured by cautious investors include bonds issued by large and financially stable companies, especially those that deliver attractive and reliable income yields. Money market funds are viewed as a safe alternative and typically compete with bank deposits.

Capital growth

Investors whose main objective is capital growth usually focus on funds that invest wholly or primarily in shares. The level of return they can hope for and the degree of risk that they run depend on the fund’s risk/reward balance. An investor seeking moderate levels of growth might invest in a fund holding shares in solid, stable companies. If they have higher growth expectations, they might pick a fund that invests in smaller, more dynamic companies. Those willing to run substantial risks in the hope of above-average returns might look to funds that invest in start-up companies in promising sectors or emerging markets.

Income

Some investors place more value in having a steady stream of income from their investments than in longer-term growth in the value of their investments, especially if they are approaching retirement or have already retired. Investment funds designed to produce regular periodic income might invest in bonds that make a fixed payment of interest to investors or in shares of companies that prioritise the payment of dividends to investors.

Updated on 04/06/13  
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