Choosing an investment fund

Which investment fund to choose?

The situation on the financial markets looks much better at the moment, and the results of investment funds are actually getting better.

So it is worth to take into account the step-by-step investment (in some instalments) into investment funds.

How to choose the best investment fund?

First of all, we should consider what class of assets and securities we will invest in. Whether it will be shares, bonds or a mix of these two securities, whether we decide on domestic or foreign stocks or larger or smaller companies.

Once we have decided to do so, we still have an easier part to play, i. e. to choose the best fund. We do it simply on the basis of historical rates of return. One thing we have to pay attention to here is that the longer the fund's record of performance (good results) is, the less hesitant the fund's performance is - the better.

It is not an art to achieve good results in one month (or in one half year) and then just top up.

So, when selecting a fund, we must look at: the more stable the history of good results, the better the fund is, and we must still remember one thing: diversification.

So, we do not throw all our investments, even into such a safe investment product as an investment fund. A better solution is to invest in several investment funds, depending on how much money we want to invest, thus protecting our investments.

Cash funds 

These are the investment funds with the lowest level of risk. They are an ideal solution for investors investing surpluses for a short period of time and expecting a profit competing with bank deposits.

They invest up to 100% of their assets in treasury and non-Treasury debt instruments. High liquidity of the investment ensures that funds can be withdrawn at any time. Depending on the selected subfund, the recommended investment duration ranges from 1 month to over 1 year.

Debt funds

These are funds investing mainly in debt instruments, including domestic treasury bills and bonds. It is a good solution for people who expect profits higher than bank deposits and do not accept the risk of investing in shares.

Depending on the selected subfund, the recommended investment duration ranges from 1.5 to over 2 years. Funds denominated in domestic currency have an average level of investment risk, while funds denominated in USD have a high level of risk.

Mixed funds

These are funds which, due to the construction of their investment portfolio, may have the investment policy at their disposal to the current market situation. Shares in the portfolio ensure a share in profits resulting from the increase in value of selected listed companies listed mainly on the stock exchange, debt instruments (i. e. Treasury bills and bonds) while increasing investment security.

The level of risk in this group of funds is defined as an average. Recommended investment time varies between 3-4 years.

Stock funds

These are funds investing in 100% of assets in shares. They are offered to investors who accept high investment risk, take into account the possibility of strong fluctuations in investment value, and in return expect high returns. Depending on the selected sub-fund, the recommended investment period is at least 5 years.

Capital conservation fund

The fund manager shall ensure that the value of the capital invested does not fall below the initial value over a specified period of time. At the same time, one can expect to earn an additional but relatively small profit.