How to choose funds
Know what you are looking for
There is no magic formula for choosing funds, as it is based on your personal circumstances including your risk appetite and investment goals. A portfolio diversified across asset classes, industries and markets has a much better chance of delivering long-term returns than one with a narrow scope. Multi-asset funds have the potential to boost returns further through tactical asset allocation – where weightings are tweaked according to prevailing economic conditions and your own changing circumstances. Investors should seek for the asssistance of fund managers with a proven track record.
How to look at a fund:
1. Its objective – Is it aimed at providing steady income or growth, or a mix of the two?
2. Its focus – Is it specific to an asset class, industry or geographic region?
3. Its track record – How has it been performing against its benchmark? Has it outperformed the market average consistently?
4. Its risk and return profile – Is the fund a good match for the level of risk you want to take?
Looking at the pricing structure and fees associated with the fund is necessary, but perhaps most important of all, make sure the funds you choose fit well with your risk appetite. Failing to do so may result in unexpected losses in your investments. You can find all of the above information on a fund factsheet.