guru speak
Asset Plus Fund Management September 25, 2012 1:00 am
In this column we will explore more complex types of investment.
Complex-return fund with capital protection: This fund invests mainly in low-risk assets such as government bonds, designed to protect the investment principal. The remaining minority investments are put into derivatives whose returns are based on changing underlying assets, such as equities, oil or gold. Risk level changes depending on what specific fund you choose, while investment capital is guaranteed under the capital protection policy.
Target fund under fund manager: Most target funds are mixed, with adjustable investment portions allocated between a fixed-income instrument and equity. We recommend that you invest in funds that gradually take profit whenever the Net Asset Value-per-unit hits the target.
Since a target fund's risk level is equal to that of an equity fund, this fund suits those with high-risk tolerance and with little time for market timing.
Equity fund managed to match or outperform benchmark index: As a rule, most of these funds feature high liquidity and daily trading. However, in trading profits, the investor will have to follow movement of the stock market on their own. The fund can be divided in two types:
_ Local equity fund - This features different investment policies - stocks that replicate the SET 100 or SET 50 Index, or dividend stocks, or large-market capitalisation stocks.
_ Foreign equity fund - Also known as a feeder fund, it invests in unit trusts of foreign mutual funds or exchange traded funds (ETF). Each fund features a different investment policy on foreign stocks.
One alternative for high-risk investors seeking high returns is daily trading in volatile commodity funds like gold and oil.
Investors must be aware, however, that seeking potentially higher returns inherently carries higher risk, so they must weigh their own risk tolerance against the expected returns. Equally critical is the need to study the fund details and policy before investing.
Investment Products Strategy Group, Asset Plus Fund Management
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