At the deVere Group, we strive to ease you in the investment world in the smoothest possible way by providing you with the investment products available in the international markets. Accordingly, we have compiled a list with details about funds you can endeavour in through the deVere fund platform.
1. Structured Notes
This is a pre-packaged investment strategy that is usually invested in a basket of several financial assets. It has a set term of usually between 3 to 6 years; it may provide an income and there is a capital guarantee. This may be investment linked. For example if linked to the FTSE SE and has a 60% protection barrier also known as downside protection, you will receive a full return of capital less any initial charge at maturity providing all indexes close at or above 60% (subject to given conditions) of their starting levels. However, if the FTSE SE increases you will receive your investment less charges plus the gain on the FTSE SE. There is risk with all investments but with structured notes you need to be comfortable with the fact that the issuer is unlikely to go bankrupt and you should also be prepared to invest for the selected term as cashing in before the end of the term may lead to losses.
2. Property Markets
Property Funds may be invested in a number of ways, either through rent collection from residential or commercial property and a number of other property related securities. There are a number of risks that are unique to property funds. Primarily, there can be less liquidity than other funds. If a fund falls significantly, property may need to be sold and this can take time and therefore if you wish to take cash from the fund this may also take time. Property funds were once regarded as an effective investment against inflation. However, three years ago these markets were looking discouraging but it is generally agreed among fund managers that over the medium term the prognosis is good and that funds will be stronger than in previous years. An advantage of a property fund is that they are managed by specialists in the field who make gains from expert knowledge and experience in this specific market.
3. Managed Funds
A managed fund is one overseen by professional fund managers who invest in a spread of investments predetermined by the risk. For example Cautious, Balanced or Aggressive approach. An aggressive fund would be evaluated to be of medium or high risk. A Cautious Fund would be considered low risk. The exact nature of the spread of investments will differ depending on market forces but they will be strictly monitored by qualified and practised fund managers. Primarily, the important thing when selecting a managed fund is to decide your desired level of risk. Higher risk managed funds may bring higher returns but may also be susceptible to greater losses in a down turn. Although past performance is not a guarantee of future returns, you should always select a managed fund whereby the fund managers have a proven track record and be of good reputation.
4. Commodity Funds
There are a number of different types of commodity funds. There are funds that:-
- Invest directly in a commodity such as gold bullion,
- Invest in companies that deal with commodity related products,
- Invest in commodity future markets whereby commodities are bought at a predetermined future date and price,
- Are combination of the above strategies.
As most commodities are based on supply and demand, their prices are not always in line with market movements. The upside and downside to commodities is that prices can fluctuate quite considerably. Most funds would however be invested in stock and are therefore not an exact mirror of the price of a commodity. They are more liquid than property funds. These are high risk funds and should be looked at for the long term. It is not recommended that an investor place all his or her available cash into these type of funds but should be part of a diversified basket of investment funds.
5. Money Markets and Currency Funds
These are highly liquid lower risk funds and are recommended for the short term or as part of a portfolio of investments. Some funds may provide regular interest payments. Typically, these funds make profits by taking advantage of changing money markets and rising interest rates. The fund price may therefore fluctuate with the changes in interest rates.
6. Emerging Markets / BRIC Funds
The majority of the assets in these funds are invested in developing countries. These are countries whose economies are growing but have yet to reach the stage of development reached by more advanced and established economies. They are also defined by the fact that there is potential for economic or political instability. There are a number of lists of emerging market countries available online. These include the MSCI, S&P, FTSE and Dow Jones. A particular fund fact sheet will usually site the list from which the country is defined as an emerging market. Although these are higher risk funds, it is generally considered that a lot of emerging economies are expected to grow up to two to three times the rate of more developed countries. Some emerging market funds have shown significantly higher rates of return than similar European investments. The majority of emerging market funds is invested in a number of assets spread across many countries in order to reduce risk. The biggest emerging markets economies are the BRIC countries, Brazil, Russia, India and China. These funds are considered to be an excellent long term investment opportunity.
7. Bonds, Fixed Interest & Deposit Funds
These are lower risk funds that invest in a number of different types of Fixed Securities. These can be government, corporate, public and convertible bonds (long term bonds that may be converted to shares or stocks after a set term). By investing in a bond fund rather than an individual bond, an individual can access a greater range of securities and is not tied to a specific term. Although they may be considered higher risk than their individual counterpart, diversification by professional fund managers can mitigate any risk. A Fixed Interest Fund will invest in bonds, debt certificates and deposits. A deposit fund will invest in a number of bank or building society deposit accounts.
8. Equities
This is a fund that invests in business stocks. These may be stocks of Giant or Mega Cap, Large Cap, Mid Cap Small Cap and Micro Cap (Cap is short for capitalisation and represents the size of the company) Companies. They can be international companies including companies in emerging market countries or domestic and therefore underlying equities in a fund may be in different currencies. These should be considered medium to long term funds and form a part of a portfolio of investments.
9. Multi Asset Funds
This is a highly diversified fund that invests in any or all of the previously discussed funds. They are designed to provide income and growth over the medium to long term. Historically multi asset funds have given a higher rate of return than equities. The risk factor will depend on the type of assets held and the objectives of the fund managers i.e. cautious or adventurous. Selecting which fund an individual needs to assess by their attitude to risk. However, the sheer diversification of the assets reduces market volatility.
If you would like to find out more about the above funds, then please click here to be guided by one of deVere’s Financial Advisers.