Investment Funds Advantages And Disadvantages in 2017 Known investment funds as investment vehicles you gather a group of investors capital and managed according to specific investment strategy and objectives set by the fund manager to achieve the advantages of a Rubix Project investment can not be for the individual investor to achieve individually in the light of the limited resources available.
According to this definition, the investment fund includes a range of securities to choose according to the foundations of specific standards and achieve objectives of the Fund investment, in addition to achieving the benefit of diversification for the investor fund, which lowers the overall risk level of investment. And avoid restrictions funds investments, which are usually located on individual investments, Vihakq have more ability to diversify, and the decline in the sale and purchase of stock costs. It consists of investment funds typically profit from capital gains, or profits resulting from improvement or change in the stock prices of the investor as well as dividend distributions, if any, of securities. The Fund is exposed to loss and in the case of lower securities comprising the Fund’s assets value.
Advantages of investment funds
1. specialized Management: The key advantage of investing in the Fund are taking advantage of the experience and knowledge of the fund manager to make better investment decisions. And requires direct investment in securities analysis, study and understanding of the determinants of profit and loss and the risks associated with securities, and these skills are available only at a limited segment of investors. So give investors the investment funds are not familiar with the skills of financial analysis the opportunity to benefit from the knowledge and professional specialists in investing in securities management, and characterized the nature of the investment total Btafrghm managers to monitor market developments and the economy, moment by moment, and their prowess in understanding the data and infer the consequences.
2. investment diversification and reduce risk: Investing in funds allows the individual investor the possibility of diversifying its investments at a cost relatively less than direct investment diversification, which gives it a greater chance to reduce the investment risk as a result of the diversity of the securities owned by the fund. And allow investment funds for investors to diversify their investments and distribution in a systematic way across a broader range of assets and geographic regions and industry to reduce the risks of concentration of assets and benefit from the revenue disparity.
Investment funds are usually divided into two types:
When establishing a fund determines the fund structuring director of the fund’s capital, which amounts to the fund will be collected and invested. Open-end fund is a flexible investment funds in terms of invested capital may increase or decrease influenced by the number of issued units, which represents the proportion of investors’ contribution to the fund and can restore investor of the value of his investment in whenever he wanted, and this type is the most common in the financial markets, including the UK. The closed-end funds, are characterized by consistently invested capital, a fixed number of its units does not change the method of exiting from the fund will not be through the redemption of Units, but through the sale of units to another investor, or the end of the term of the Fund.
With the accelerated pace of the emergence of financial innovations in the late eighties and particularly in 1989, he appeared for the first time traded index funds (ETF) that combines the flexibility of open-end funds in terms of capital and high liquidity that characterize the closed-end funds. There were these funds through the Canadian market followed by the US market in 1993, and since that time, these funds began to grow at a rapid pace.
Advantages of ETFs
Since ETFs track the market indicators, it is easy to identify the investment of these funds in terms of content and proportions of investments, and is committed to issuers of these funds publish full disclosure of information about their funds and indicators that followed. These funds also characterized by continuous assessment of the fund manager during the trading value of the unit periods, or what is known as indicative value of the net assets of the unit (iNAV), in addition to the end of the day or assess what is known as the net asset value (NAV).
Due to the inclusion in the market, characterized by units ETFs easily dealt with as the investor can buy or sell units directly through the market and immediate, the same way as buying stocks. As well as the investor can purchase any of the ETFs, regardless of the source, unlike mutual funds, T-handle requires investment by the fund manager directly. Moreover, there is no minimum for participation in ETFs.
Featuring investment in ETFs is mainly a lack of size and costs because the management fees are low, and the reason is the investment style, which is the investment is active does not require making decisions in picking stocks, but the fund follows a certain indicator. In addition, the investor bears the trading units of these funds, the cost of a purchase and sales commissions compared to the subscription and redemption fees, if any, of other funds. The source also committed to fund these expenses disclosed in the Memorandum of Terms and Conditions. To facilitate trading units ETFs appointed fund manager of the fund market maker.
The market maker Michael Crawford Quantum Code is hand licensed by the Capital Market Authority and job providing liquidity in the ETFs market so that a continuous orders to buy and sell is available, he can count the investor at any time to buy or sell units.