THOUGHT OF THE WEEK
COLLECTIVE INVESTMENT SCHEMES (PART 2)
Types of Collective Investment Schemes Collective investment schemes can invest in shares, bonds, deposits and other investment classes. The fund managers select the investments they think will do best and switch from one to another as market conditions change. However, fund managers are obliged to follow prescribed investment criteria that are set out in the prospectus that is approved by the regulator. Money market – They invest in deposits and short-term securities. These are low risk but cannot be expected to give high returns over the long run.
a. Fixed Income Funds – invest in corporate bonds, government bonds and/or similar securities. They are medium to low risk and usually aimed at providing income rather than growth
b. Equity Funds – generally involve more risk than money market or fixed income funds, but can also offer the highest returns. A fund’s value (Net Asset Value) can rise and fall quickly over the short term, but historically shares have performed better over the long term than other type of investments. Not all equity funds are the same. For example, growth funds focus on stocks that may not pay a regular dividend but have the potential for large capital gains.
c. Balanced Funds – invest in a combination of shares and bonds, ensuring diversification. They are suitable if you want a medium-risk investment. They can be aimed at providing income, growth or both.
d. Sector funds – invests in a specific sector such as Retail or Telecommunication Services… (To be continued)
This weekly report is the copyright of NIMED Capital Ltd. (NIMED), an investment banking company licensed and regulated by the Securities and Exchange Commission (S.E.C.) of Ghana as Investment Advisers as well as the National Pensions Regulatory Authority (N.P.R.A.) as an approved Pension Fund Manager. Information and opinions herein have been compiled or arrived at based on information obtained from sources considered reliable; we therefore do not hold ourselves responsible for its completeness or accuracy. All statements of opinion, projections, forecasts, or those relating to expectations regarding future events or performance of investments represent NIMED’s own assessment and interpretation of information currently available to NIMED, which are subject to change.