What is an investment fund?
An investment fund pools investors’ assets under a stated investment strategy. Its unit value changes with the underlying portfolio.
Fund structure
1. Holdings Funds may hold equities, bonds or other eligible assets, as specified by their mandate. 2. Unit value Net assets divided by units gives net asset value per unit. Pricing and settlement vary by fund. 3. Risk Equity and money-market funds have different exposures. Diversification does not eliminate loss risk. 4. Fees Management and operating costs lower net returns. Compare similar periods and currencies.
What to review
5. Dealing Order cutoffs and settlement terms matter. A displayed price at order time may not be final. 6. Documents Review key information, prospectus, holdings and risks. Past returns do not assure future ones. 7. Comparing funds Two funds with different holdings can show different risks and returns. Past winners alone reveal little without holdings, volatility and costs.