All investments are risky because of political and economic uncertainty events. Although it is unavoidable, minimize the risk is still possible. Funds gather all the investment power from individual and institutional investors that offer the benefits of portfolio diversification, this reduces the limitation of time and capital problem. Besides, funds provide greater safety and reduced volatility, professional management, and stand ready to buy back its shares at the current net asset value. Investors are able to invest in a variety of securities, including stocks, bonds, and money market instruments. They offer growth, income, or both, and the opportunity to invest in everything from a country or industry to the movements of the markets themselves. Diversification works best when the returns of the securities are varied, so that losses incurred by securities falling in price are offset by gains of those rising in price. By nature, mutual funds are a diversified investment.The practice of spreading investments among different securities to reduce risk.
Professional fund manager managed fund with at least three to five years working experience in professional or financial area. Through an international network, they gain access to first hand macro and micro information, which enables them to make the best investment decisions. They provide the fund with investment research and portfolio management services. Based on their general knowledge and supports from analysts, individual investors are able to choose appropriate countries and securities going to invest to obtain the largest yield. As a result, all the investors able to use reasonable portfolio to get the best management service.
It is not the best and suitable way for investment only focus on Hong Kong stock market. However, individual power is hard to catch on the potential of overseas markets because of insufficient time and market information. Not only that, invest on overseas' markets need high transaction costs. Investor can then involved in worldwide market via fund investment and can overcome the previous drawbacks. Fund provides an efficient and cost-effective means to gain access to these markets.
Most of the funds employ US dollar as major currency that has more stable changing currency exchange rates. Currency risk thus can be reduced and reduce potential for price fluctuations in the dollar value of international stocks
Mutual fund shares are redeemable on any business day. Unlike other investments, Investors are able to redeem without any limitation of time period. Redeem (bought back) means to cash in shares by selling them back to the mutual fund. The price at which a mutual fund's shares are redeemed (bought back) by the fund is called redemption price. The value of the shares depends on the market value of the fund's portfolio of securities at the time. This value is the same as "net asset value (NAV) per share."
Local investment expert can use telephone for trading. Facsimile orders also available for overseas investors. Therefore, no matter where the investors are, they can still handle the funds trading procedure easily.
Analysis the local markets future, including economic growth, company's earning, price-to-earnings ratio (P/E), etc.
Other than the fund's performance, the objective or the fund manager should also have the same financial goals, expected yield and the risk that the investor can withstand.
Identify the best timing of "when to buy, and when to sell", how long the investment to be held, etc.
An amount charged to purchase shares in many mutual funds sold by brokers or other sales agents. The maximum allowable charge is 8.5% of the initial investment. A sales charge assessed by certain mutual funds or load funds to cover selling costs. A front-end load is charged at the time of purchase. A fund has different load breakpoints depending on the purchase total. A back-end load is charged at the time of sale.
A fee charged by some funds when shares are sold (redeemed).
The amount a fund pays to its investment adviser for its services. The average annual fee industry wide is about one half of one percent of fund assets. A fund's management fee must be listed in its prospectus.
A type of back end load sales charge, a deferred sales charge is a fee charged when shares are redeemed within a specific period following their purchase. The amount of the fee usually varies depending on how long the investment is held--generally the longer the time period, the smaller the fee. Funds sold under several sales charge options usually refer to the shares sold with a back end load as class B shares.
Bong fund invests primarily in bonds that issued by corporations, municipalities, or the U.S. government and related agencies. Bond funds generally emphasize income over growth, and can generate either taxable or tax-free income.
It invests primarily in common stocks. The investment objectives of common stock funds may vary greatly.
It's objective of both long-term growth and income, through investment in both stocks and bonds. Typically, the stock/bond ratio ranges around 60%/40%. This broader diversification across asset classes tends to further reduce risk.
A fund that invests in a variety of assets classes, including domestic and foreign stocks and bonds, money market instruments, precious metals, and real estate. Some asset allocation funds maintain a relatively fixed allocation between asset classes, while others actively alter the mix as market conditions change.
A fund that invests primarily in lower rated bonds also referred to as junk bonds. High yield bond funds generally seek high returns and tend to be one of the riskier bond fund investments.
A fund that can invest in stocks, bonds and cash in whatever proportion the manager deems appropriate, providing the manager total flexibility to achieve maximum returns. Flexible portfolio funds are sometimes called asset allocation funds
A fund that invests primarily in securities of companies engaged in a specific investment segment. Sector funds entail more risk, but may offer greater potential returns than funds that diversify their portfolios. For example, a sector fund may limit its holdings to securities from a particular country or geographic region, or it may specialize in the securities of energy-related firms, or in companies those produce precious metals.
A fund that invests primarily in the securities of companies located outside of the United States. In general, international investing not only offers diversification and the potential for high returns, but also involves special risks, such as currency concerns, and rapidly changing political scenarios.
These funds invest in bonds issued by municipalities located all in one particular state. Residents of that state earn income that is exempt from federal, state, and sometimes city income taxes.
This investment objective focuses on rapid growth of capital. Aggressive growth funds usually include funds that invest in smaller companies, funds that invest heavily in a single industry, and funds that employ riskier investment techniques such as leveraging and short selling.
It trades options to increase the value of its shares. The fund may either be conservative or aggressive. A conservative fund, commonly called an "option income fund," may buy stocks and increase shareholders' income through the premium earned by writing options on the stocks within the portfolio. An aggressive fund, commonly called an "option growth fund," may buy options in securities that the fund manager thinks will fall or rise sharply in the near term.
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