We have categorised each fund to help you understand the potential risks of each one and the possible impact on returns. In the Investment Fund Guide we have added a section showing the different risks associated with each particular fund.
Passive managed funds
These funds aim to achieve long-term growth through investment in a mixture of equity, fixed income and property securities, and cash. That mixture will be broadly consistent with the relevant ABI peer group. This will be achieved by investing in Exchange Traded Funds (ETFs) or equivalent vehicles that track appropriate indices.
Active Managed Funds
These funds aim to achieve long term growth through investment in asset classes such as equities, fixed income securities (bonds and gilts) cash and property. This will be achieved by investing directly into these assets or by investing in funds that invest in these asset classes (multi manager funds).
Equities
Our range of equity funds invest across the globe. Within geographic areas, the following sub categories have been created:
Core funds are mainstream, typically with tight risk controls relative to a main market or peer group benchmark. They will seek to outperform these benchmarks over the medium to long term.
Core plus funds are managed and structured with a view to outperforming main market or peer group benchmarks significantly over the medium to long term. The management of these funds is less relevant to a benchmark when compared to a core fund.
Specialist funds adopt a wide range of approaches to generating their return. They are often managed with little reference to main market or peer group benchmarks and performance can differ significantly from these.
Fixed Interest Funds
Investment grade funds invest predominantly in large corporate or government borrowers. The nature of these borrowers means that funds in this category can be considered lower risk.
High yield funds invest in predominantly less credit-worthy corporate borrowers and emerging government debt. Because of the increased risk of default on income and debt repayment, funds in this category can be considered higher risk.
Strategic funds invest in debt across the fixed interest spectrum with the
manager free to allocate the fund's assets to the most attractive market areas in the prevailing market environment.
Mixed asset funds invest predominantly in bonds though can include other assets such as equities and preference shares. The wider range of assets means that these funds can be considered higher risk than other fixed interest funds.
Property Funds
Direct property funds invest directly in the actual brick and mortar assets though they may hold cash and fixed interest for liquidity purposes.
Mixed property funds invest in both physical property assets (bricks and mortar), property securities and real estate investment trusts.
Company based property funds invest primarily in property shares and real estate investment trusts. This will typically provide a higher risk than might be expected from a more traditional property fund.
Cash Funds
Funds which aim to achieve returns that keep pace with or outperform inflation whilst remaining easily accessible.
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