investment funds
investment funds :
Mutual funds are a method used to provide funds to a group of investors by holding their own securities. Each investor retains ownership of his securities and the investment fund contributes to a variety of investment opportunities.
Mutual funds are also defined as a pool of money owned by a group of investors, managed by financial investment professionals, who make decisions to sell or buy a group of securities, such as bonds and equities, which contributes to the diversity of private ownership in each shareholder. Investment Fund.
Another definition of mutual funds is that it collects money from individual investors, companies and diversified enterprises, and then contracts with a manager or financial expert to manage the contents of investment funds. The aim is to provide the highest returns with minimal risk.
Types of investment funds :
There are a variety of types of investment funds, each of which has a role in the stock market, and the following information about it:
- Equity funds are funds that depend on the overall trading of investments away from any ownership of companies within the private sector. These funds are the most volatile and changing; their value continues to rise and fall within a short period of time. Historically, the performance of equity funds is the best among other fund types. Stock trading depends on the future results of companies in their market share, which include an increase in their revenues and profits, which increases the value of their investors' rights.
- Fixed Income Funds: Mutual funds are also called bond funds. They invest in private debt in public and private sector companies to provide profit-based income. These funds typically have an investment portfolio that enhances the investor's financial returns by providing fixed income When stock funds lose their value in the financial marker .
- Financial market funds are low-risk funds compared to other funds. These funds are limited to high-quality investments, often short-term from government or local companies.
- Balanced Funds: Funds that aim to provide a balanced mix of security (low risk), capital and income. Balanced investment funds rely on the implementation of an investment strategy in equities and fixed income. The typical balanced fund contains 60% equity and 40% of fixed income, but it is possible to achieve maximum or minimum balance of assets.
- International funds: Funds are also known as global funds or foreign funds, often used by investors who invest money outside their home countries. These funds rely on investments worldwide and often have difficulty rating their own funds; Their risk or risk may increase more than local investment funds because they tend to be more variable due to many factors such as political influences.
- Specialized funds: They are one of the most comprehensive investment funds because they contain more than one category of securities that are most popular, but these funds dispense with diversification within the economy. They target the funds of certain sectors, such as health, finance and technology, which are increasing. The chances of achieving profits, and the types of these funds:
- Regional funds: Funds that are concerned with applying investment within a given region; ie, focus on a particular place, such as provinces or countries. These funds are easily used in investments that depend on the purchase of foreign shares.
- Social funds: also known as ethical funds, are based on the application of investment in companies that meet specific investment standards and are linked to ethics. Money is not invested in arms or alcohol companies.
- Benchmark Funds: Funds that are interested in investing in number indices, including stock market results, are characterized by low risk.
Advantages of investment funds
Investment funds are one of the most widely used investment options among people, because they provide many advantages, the most important of which are :
- Professional Management: The investment funds are a group of managers who are looking for the best investment methods for securities, and monitor the performance of investment funds.
- Diversity: The ability to invest in the securities of a group of companies and institutions, which contributes to reducing the risk ratio in the event of bankruptcy or loss of a company.
- Liquidity: The ability to sell shares to investors in case any investor needs to obtain liquidity.
Risk of investment funds
Investment funds affect a range of risks and are distributed according to the following categories:
- Low risk investment funds: These funds are characterized by their low risk and are characterized by the following characteristics:
- Low risk level, as investors are interested in reducing risk in order to stay away from negative results resulting in the short term investment.
- Stay away from all fluctuations in investment prices to ensure that all investments remain safe.
- Relatively low profits because of the low risk ratio in these funds.
- The constant need for investors to obtain liquidity.
- Medium Risk Funds: Medium risk funds are relatively medium and have the following characteristics:
- The ability to tolerate various changes in prices, while accepting the idea of financial losses in capital.
- The need for liquidity is almost moderate.
- High risk investment funds: These funds are based on the following characteristics:
- There is considerable experience with investors in these funds within the financial markets.
- The need for liquidity is very low .