How to choose the right investment fund? When choosing the right type of fund an investor should consider the type of fund and related issues like:
– investment opportunities of given type of fund (permissible height of the deposit and applicable investment limits),
– methods and deadlines of exiting depending on the title of an investor,
– the assessment of credit rating awarded by a recognized specialist funds, so called credit rating agencies. Agencies are characterized by independence and high objectivity. They base their assessment on a much more detailed information than those commonly available on the market, so investors are taking them into account in making investment decisions, which reduces the risk associated with the fund assets. Not all funds have such a rating.
– the opportunity to participate in the governing body of the Fund (in the council meeting of investors), and therefore the ability to influence its functioning, and even on the investment policy,
What else is important when choosing best investment fund?
– of course costs associated with participation in the fund. Each investor should be prepared to bear the costs of his participation, which includes costs incurred by the fund and handling fees for disposal or repurchasing of units. Before choosing a fund one should therefore compare not only the fee amount, but also other investment costs.
– investment objectives of the fund and the associated investment risk in relation to its own objectives and degree of risk acceptance. Note that the investment objective, the fund statute clearly stipulates that the fund does not guarantee achievements, and thus – to make a profit. It means that the value of the units may fluctuate up and down.
– The investment policy of the fund and related investment risks specific to the investment fund. We have to take into account the composition of the portfolio of the selected fund of the competition. I’d recommend using the analysis of risk factors associated with the fund investment, as defined in the prospectus of the funds.
– the time for which the fund was created. Term funds are usually created to achieve a specific investment objective over a predetermined period of time.
– rules of receiving revenue from the investments. The investor should note if during the existence of the fund the payment of the income of the fund is provided without having to repurchase shares.
How to choose the right investment fund? It is worth noting when choosing the right type of fund that the amount of fees depends largely on the manner of distribution of units purchased by the investor and the associated costs. Handling fee states for the cost of a distributor’s selling and buying of shares and is his salary. Many funds allow to place orders by phone, fax or via the Internet, which is usually associated with lower fees. Fund Regulations have to specify the maximum amount and manner of collecting such fees.