Other criteria

Another very important aspect is to select the right fund, which we often mention on Webinar Universe. One of the most important selection criteria in this case is the type of funds. Because you can choose from:

• FIO – open-end investment funds
• SFIO – specialist open-end funds
• I FIZ, i.e. closed-end investment funds.

Another extremely important selection criterion is the selection of the fund taking into account the structure of its investment portfolio, the nature of the transactions carried out, the rate of return that can be obtained and the degree of investment risk acceptable to the investor himself.

Due to the various forms of investments carried out, investment funds can be divided into hedge funds, classified as aggressive funds, implementing risky but also the most profitable investment strategies. The cash invested in them is invested in assets such as commodities, commodities, stocks and other high-risk financial instruments. In addition, these funds use leverage to obtain the highest possible rate of return on investment, thanks to which they have the opportunity to trade capital much higher than the one they have. In addition, thanks to the use of leverage, they gain the option of obtaining multiple profits. However, they also bear the risk of multiple losses. Moreover, hedge fund investment strategies also allow for the arbitrage technique. It is an investment strategy based on the monitoring of the markets by managers. And quickly buy assets whose price has fallen at the moment in order to resell them when their price rises again.

Equity Funds

Equity funds, which are also part of the aggressive funds group, invest the collected funds primarily in shares of foreign listed companies or other equity securities. Their goal, as in the case of hedge funds, is to generate a relatively high rate of return. In the case of equity funds, the percentage share of cash invested in shares usually oscillates around 66%, which is of course included in the articles of association.

During a bull market in the stock market, equity funds can generate very high rates of return on investment. On the other hand, in times of unfavourable economic situation, participation units of equity funds may significantly reduce their value. We explain this topic on our training platform. Therefore, these are funds that offer high returns, but are also burdened with high investment risk. In addition, due to the nature of the companies, equity funds include:

• Foreign markets.
• Small and medium-cap funds and
• Index Funds

Debt securities funds

Generally referred to as debt securities funds, they are classified as safe funds. They invest their financial resources mainly in bonds issued by the State Treasury, local governments and enterprises. Debt securities can also come in the form of cheques, bills of exchange, trade bills, or mortgage bonds. Funds of this type do not invest in stocks. Hence, they generate slightly lower but stable interest yields. And they are designed for people who want to accumulate savings over a longer period of time and at the same time do not accept the increased risk associated with buying stocks.

Since debt securities funds are additionally divided into three subgroups due to the diversification of their investment portfolio, investors who prefer a slightly less profitable, but safe way of investing have a choice of:

• Treasury bond funds.
• Commercial bonds.
• And money market funds.

Mixed Funds

Blended funds are also referred to as hybrid or balanced. These are institutions that invest the collected funds in both risky financial instruments and company shares. As well as safe instruments, such as Treasury bills, covered bonds, Treasury and commercial bonds. Therefore, they are an intermediate solution between aggressive and safe funds. Hybrid funds are further divided into:

• Stable growth funds whose investment portfolio consists of most often in 20%-40% from stocks and in 60%-80% from bonds or other securities.
• And balanced funds with inverse portfolio ratios Investment.

Mixed funds are characterized by moderate investment risk. However, this level varies and depends on the type of fund and its investment portfolio. During a bull market, the valuation growth of mixed funds is much slower compared to equity funds. On the other hand, during an unfavourable market situation, participants in such funds lose less value of participation units than participants in aggressive funds.

Private Asset Funds

They are also referred to as alternative funds. Funds of this type invest participants' funds in non-public companies that are just preparing for progression, but they are limited by too low capital. At the same time, they promise a huge opportunity for growth and anticipate great market success. Funds investing cash in such enterprises expect a high rate of return over a time horizon of several years or even several decades.

Another form of capital multiplication in this type of funds is the method of buying inexpensive companies which, thanks to their activity in promising sectors of the economy, have a chance for rapid development and high profits. An additional benefit of this type of investment is the option of obtaining spare funds to finance further investment projects.

Due to the nature of the investment portfolio, private asset funds are characterized by low financial liquidity and a long-term investment time horizon. The moment of exiting the investment before the expiry of a certain period of time may be very difficult or even impossible. Therefore, they are burdened with a fairly high investment risk. In addition, when deciding on this type of fund, you should take into account the long-term time horizon necessary to generate profits. If you want to understand this aspect thoroughly, it is worth going to Webinar Universe, in the webinars tab. To sum up, choosing an investment fund is not an easy decision, especially since trustworthy partners such as Forex brokers allow you to invest on your own. Therefore, when making a decision, it is worth sticking to a specific chronology of activities.

Another very important issue is, of course, the choice of an investment fund. Making such an important decision should undoubtedly be preceded by the acquisition of extensive knowledge about the essence and functioning of individual funds. With particular emphasis on:

• investment profile, which should be in line with the investment objectives pursued;
• investment risk tolerance system determining the acceptable amount of Loss;
• investment time horizon;
• which determine the rate of return;
• diversification of the portfolio, which will ensure the effectiveness and stability of the investments carried out;
• past performance of the funds, which indicates the effectiveness of the fund in relation to the risks incurred.

In conclusion, investing in mutual funds can be a good way to diversify your portfolio, but it depends on a variety of factors, such as: investment goals, risk preferences, length of investment, and the investor's knowledge and experience.

With the funds, an investor can gain access to a variety of markets and industries that may be difficult or expensive to get to on their own. However, before investing in mutual funds, it is important to have a thorough understanding of the fund's investment strategy, its fees and costs, its performance history, and the risks associated with the fund. Investing in funds requires trust in the professionals who manage them. In any case, it is always advisable to consult with a financial advisor before making a decision to tailor your investment strategy to your individual needs and financial situation.