What Investments Are Included in a Fund?
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Every fund is different and is made up of different investment products. These products - known as assets btw - starting from lowest risk, are:
Cash… money deposited in bank accounts or used in short-term loans in return for interest payments.
Bonds… money lent to large companies or the government in return for interest payments.
Property… the pounds used to buy commercial or residential property.
Stocks and shares (aka equities)… money used to buy portions of different companies.
Commodities… this can be gold, oil, coffee beans, and anything else tangible.
Depending on the combination of products used, the fund can be labelled as low, medium or high risk.
MOXI Tip: Funds that contain mainly cash or bonds are lower risk while those with more equities or commodities are higher risk.
The below pie chart (we love these!) illustrates a low-risk fund vs a high-risk fund. The choice of assets included in a fund is known as 'Asset Allocation' and is always shown on a Fund's Factsheet.