Mutual Fund
Mutual Fund
Mutual funds, also known as managed investments, allow you to pool your money with that of many other investors so that the mutual fund can buy a wide range of investments managed by a professional team. This includes investments which may not ordinarily be available to you through direct investment such as large commercial properties and corporate bonds.
For whom are mutual funds most suitable?
Mutual funds are a simple and convenient investment option for people who have a long-term investment horizon but do not have either thetime, desire, or expertise to invest directly in financial markets.
Mutual funds can be particularly suitable for smaller, first time investors as they offer the opportunity to establish a broadly diversified portfolio of assets with a relatively small amount of money.
However, larger investors can also benefit from mutual funds as they provide access to the expertise of professional investment managers.
When you invest in a mutual fund, your money buys 'units' in that fund, at a price that is struck for that particular day. Over the period in which you invest, the mutual fund price will move up and down as the value of the investments with the mutual fund rise or fall. Returns from a mutual fund are typically calculated based on movements in the bid (or withdrawal) mutual fund price and assume any income distributions paid to investors are reinvested in the fund as additional units.
Direct investment versus mutual funds - 'pros' and 'cons'?
Once you have decided to invest, you have a choice of investing directly or through a mutual fund. Which method is appropriate may well depend on your individual investment needs, however, using professional fund managers can generally provide better returns over the long-term.
Fund managers tend to outperform individual investors because:
- Their portfolios are constructed using a defined and consistent investment philosophy;
- Fund managers have a far greater access to quality information including company contacts, competitors and customers than do individual investors;
- Fund managers employ full-time investment professionals to monitor investment markets and the way economic developments affect these markets;
- The size of their portfolios generally means that fund managers can more easily reduce risk through greater diversification. They can also reduce risk by implementing sophisticated risk-management techniques involving the use of derivatives; and
- Fund managers have the economies of scale to reduce expenses through lower transaction costs. For example, fund managers generally pay much lower commissions to stockbrokers.
- Liquid: Liquid means the easiness to redeem your Investment at any time, unlike the deposits which can only withdraw in certain period of time.
Our process is focused on the early identification of fundamental change.
We believe alpha is generated from disciplined portfolio construction with superior stocks with the following characteristics:
- Improving and sustainable business fundamentals
- Attractive relative valuations
- Increasing investor expectations
We make country, sector & tactical cash-equity calls.
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