Source: Erik Schriemer, investment expert at MeDirect
An investment fund is a widely used financial product. Instead of making your own decisions about your investments, you join a group of investors with a mutual fund and have an expert fund manager invest on your behalf. As an investor in a fund, you own a piece of the fund. The value of this piece rises or falls depending on the performance of the securities in the fund’s portfolio.
Investing in an investment fund has some advantages: your portfolio is well diversified at once and there is a professional manager who will work for you. But it’s important to realize that this isn’t free. Although you do not have to pay any costs for the purchase and sale of investment funds at MeDirect, there are also costs in the fund itself: think of the management costs and transaction costs. These costs are collectively referred to as the ‘ongoing costs’ and are often expressed as a percentage. These costs affect your return. That is why it is important to research the costs of an investment fund in advance before you invest in it.
There are many mutual funds and that can be quite intimidating. There are also many different types of funds that each pursue a different investment goal. Some funds aim to grow your money over time by investing in stocks, while other funds focus on providing a fixed income by investing in bonds and other fixed income securities. You also have funds that invest in a specific theme, such as technology or renewable energy, with the expectation that the particular theme will stimulate growth in the future and yield strong returns. These funds are called thematic funds. Read more about investing in thematic funds here.
In short, if you decide to invest in an investment fund, you invest in a basket of securities together with other investors and use the expertise of a professional fund manager. Investing in a fund offers you the opportunity for diversification and you have a professional manager who manages the portfolio for you, but keep in mind that there are costs that can affect your return.
Investing in an investment fund is very easy at MeDirect:
- Wide universe of investment funds: MeDirect offers a wide choice of investment funds.
- User-friendly platform: Our user-friendly platform makes investing simple and fun. You get access to important information and useful tools. With our filtering options we make it very easy to find the right fund that suits your investment goal.
- Low costs: Buying and selling mutual funds is free at MeDirect. You only pay a small annual fee of 0.30% on your invested amount. Check the costs here.
- Free investment training: At MeDirect we want to make investing easier. That is why all our customers receive an online training program at Markets are Everywhere. Terms and conditions apply, click here for more information.
- Expert support: If you have a question, don’t hesitate to ask!
Disclaimer
This information is intended for general information purposes only. The information in this section does not take into account the circumstances specific to any person or entity, and this information should not be construed as personal, professional or legal advice or equivalent. No rights or obligations can be derived from this information in any way.
The information provided is not intended as a suggestion, recommendation or invitation to buy, hold or sell securities. MeDirect does not guarantee the completeness or accuracy of this information.
The financial instruments discussed may not be suitable for all investors and investors should make their own informed decisions and obtain information on their own about the appropriateness of investing in financial instruments or implementing strategies that may have been discussed in this information.
If you invest in a product, you may lose some or all of the money you invest. The value of your investment can go down as well as up. Any income you get from an investment can go down as well as up.
MeDirect Bank is a trading name of MeDirect Bank (Malta) plc, registered under company number C34125, MeDirect is licensed to conduct banking activities in accordance with the Maltese Banking Act (Cap. 371) and investment services under the Maltese Investment Services Act (Cap. 370).