How to profit from Funds
Investing in Funds can be a useful way of putting your money into the stock market. It spreads your risk across a range of companies. It allows you (when they're good at their job) to benefit from the expertise of City professionals, with their access to extensive research and analysis. And investment funds also allow you to invest in specialist, overseas and emerging markets, where it can be much more difficult for the private investor to purchase shares in individual companies.
The main drawback to investment funds is the cost. You usually have to pay both an initial fee (but not always) and an annual management fee, and these can significantly reduce your investment returns. And then some funds simply perform badly. They could be launched at the wrong time (at the top of a bull market), or ineptly managed.
Hedge funds are specialist investment funds which have had a particularly high profile in recent years. But although they may be expert at making themselves wealthy, are hedge fund managers worth the money? For more on this topic, get MoneyWeek magazine delivered to your door every week plus full access to all online content.
If you're new to investing in funds, we recommend that you read MoneyWeek – particularly for our Fund of the Week feature. And to get all our latest advice on the best funds to invest in, just sign up to our FREE Trial.
