Asset Management

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What is a Fund?

A fund is an investment vehicle that invests its capital in securities. Capital from many investors are pooled together and invested in different assets, depending on the type of fund investment strategy.

What are the common types of Funds?

  • Income funds invest in fixed income instruments such as government or corporate bonds, and generally have a low risk.
  • Equity funds invest in stocks, and generally have a higher risk.
  • Balanced funds invest in both fixed income securities and stocks, and have a risk that varies according to the investment allocations.
  • Money Market funds invest in short term, highly liquid securities, such as short term bonds, and have a very low risk.

What are the advantages of investing in a Fund?

  • Benefit from the fund manager’s knowledge and expertise.
  • Reduced risk through asset diversification.
  • Reduced transaction fees free up more capital to invest.
  • Funds are generally liquid investments, allowing investors to buy and sell units in short periods of time.
  • Limited time and knowledge is needed to invest.

What does a Fund manager do?

  • Manages the fund’s asset portfolio to produce maximum return on investment.
  • Analyzes the market to determine the performance of assets.
  • Implements investment strategies.

How do you evaluate your Fund manager?

  • How is the fund performing relative to indexes and benchmarks?
  • How is the fund performing relative to similar funds?
  • How has the fund been performing historically?
  • Is the implemented investment strategy similar to the proposed theoretical investment strategy?
  • Is the fund fulfilling the investment objective?

How do Funds make money?

  • Through dividend and interest yield (if applicable).
  • Through the increase in the value of assets.

How is the Net Asset Value (price of the fund) determined?

The NAV is computed by adding the dividend/interest yield of all the assets with the value of the assets, and subtracting the fees and expenses. The NAV is then divided by the number of units in the fund to determine the price of one unit.

* For further details on funds or the benefits of investing with us, please contact us.
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