What Fund Objectives are Right for Me?

Mutual funds will invariably publish a set of objectives that they seek to achieve, and this being indicative, the investor is still able to select objectives that suit individual needs.

 

Given that any market caters for the basic premise of the resolution of varying opinions, requirements and levels of comfort, the objectives of various mutual funds are no exception.

Traditionally, the stock market, while having recently suffered significant retracements, over time demonstrates a steady growth across the indices of the developed nations of the world, which include that of the United Kingdom, to return a gain of between 10 % and 14% historically - less domestic inflation.

With such objective performance, an individual preeminently concerned with the growth of their investment could be said to find satisfaction in one of the many equity mutual funds available in the UK.

These types of funds generally use an index method of investment by diversifying their risk into a broad indices exposure, and also by investing in listed companies whose balance sheet reads that, as a matter of policy as opposed to returning dividends to share holders, the company actively moves to focus on capital growth through the reinvestment of profits into research and expansion of its operations. Over time, these types of companies, particularly those with intensely healthy balance sheets with low debt gearing, have proven to offer share holders tremendous gains.

Of course, another individual may require the security of an income stream to represent asset growth. This type of individual is generally better suited to mutual funds that invest specifically in bonds.

However, various types of bonds exist, with varying degrees of return which are balanced against security. Even against the stock market and its historical returns, the safest investment is in that of government bonds.

Government bonds are issued in order to finance public spending, but as the cash flow of a government by definition is sound, and the fact that the government actually is the guarantor of domestic currency, in the UK, one can't go past the security of Gilt Edged Bonds secured by the UK government.

These bonds characteristically offer premium security whilst also providing a bi-annual coupon to the holder. This coupon rate is fixed, and because they are sold at a discount from face value, is additional to the face value redeemable upon maturity. Still, the maturity of these bonds can span any number of years, within which an unbelievably active secondary market seeks to buy and sell them. Being that simple liquidation is another feature of the government bond, the investor has a great deal of flexibility in their investment.

In contrast, corporate bonds are able to offer a far higher coupon and discount rate upon their issue, therefore enabling the achievement of faster capital growth, however this is generally at the expense of investment security.

For the investor with tax relief as a vital issue in their objectives, it is important to consider the ever-changing dynamics of the UK tax schedule. Her Majesty's Revenue & Customs has designed numerous approved and unapproved schemes which are able to be legitimately taken advantage of in order to preserve ones earnings. Such specific knowledge should be subsequently followed up by thoughtful and carefully judged entry into a mutual fund that invests heavily in an array of municipal bonds, the holders of which are able to receive tax exemption on certain income or capital gains, the benefits of which are consequently passed on to members. Taking risks is an intrinsic element of investments; for information and advice on how a negative experience with investment can affect the health of your finances, please visit this website, or alternatively information can be found through lists of IVA companies.

Mutual funds will invariably publish a set of objectives that they seek to achieve, and this being indicative, the investor is still able to select objectives that suit individual needs.

 

Given that any market caters for the basic premise of the resolution of varying opinions, requirements and levels of comfort, the objectives of various mutual funds are no exception.

Traditionally, the stock market, while having recently suffered significant retracements, over time demonstrates a steady growth across the indices of the developed nations of the world, which include that of the United Kingdom, to return a gain of between 10 % and 14% historically - less domestic inflation.

With such objective performance, an individual preeminently concerned with the growth of their investment could be said to find satisfaction in one of the many equity mutual funds available in the UK.

These types of funds generally use an index method of investment by diversifying their risk into a broad indices exposure, and also by investing in listed companies whose balance sheet reads that, as a matter of policy as opposed to returning dividends to share holders, the company actively moves to focus on capital growth through the reinvestment of profits into research and expansion of its operations. Over time, these types of companies, particularly those with intensely healthy balance sheets with low debt gearing, have proven to offer share holders tremendous gains.

Of course, another individual may require the security of an income stream to represent asset growth. This type of individual is generally better suited to mutual funds that invest specifically in bonds.

However, various types of bonds exist, with varying degrees of return which are balanced against security. Even against the stock market and its historical returns, the safest investment is in that of government bonds.

Government bonds are issued in order to finance public spending, but as the cash flow of a government by definition is sound, and the fact that the government actually is the guarantor of domestic currency, in the UK, one can't go past the security of Gilt Edged Bonds secured by the UK government.

These bonds characteristically offer premium security whilst also providing a bi-annual coupon to the holder. This coupon rate is fixed, and because they are sold at a discount from face value, is additional to the face value redeemable upon maturity. Still, the maturity of these bonds can span any number of years, within which an unbelievably active secondary market seeks to buy and sell them. Being that simple liquidation is another feature of the government bond, the investor has a great deal of flexibility in their investment.

In contrast, corporate bonds are able to offer a far higher coupon and discount rate upon their issue, therefore enabling the achievement of faster capital growth, however this is generally at the expense of investment security.

For the investor with tax relief as a vital issue in their objectives, it is important to consider the ever-changing dynamics of the UK tax schedule. Her Majesty's Revenue & Customs has designed numerous approved and unapproved schemes which are able to be legitimately taken advantage of in order to preserve ones earnings. Such specific knowledge should be subsequently followed up by thoughtful and carefully judged entry into a mutual fund that invests heavily in an array of municipal bonds, the holders of which are able to receive tax exemption on certain income or capital gains, the benefits of which are consequently passed on to members. Taking risks is an intrinsic element of investments; for information and advice on how a negative experience with investment can affect the health of your finances, please visit this website, or alternatively information can be found through lists of IVA companies.