If you know how important it is to have an investment portfolio but don’t have the time, knowledge, or inclination as a busy medical or dental professional to properly manage your investments, that doesn’t mean you have to miss out. Professional fund managers are available to help you manage your money so that you don’t have to.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
What are funds?
Funds are collective investments, so you pool your money together with other investors in order to spread your money across a wide range of investments, which helps reduce your overall risk.
You can pick the asset class, geography, or theme for your fund managers to work with and select your investments. Funds help you build a diversified portfolio, which is essential for investing. Plus, you’re not limited to one country’s market, funds enable you to access markets all around the world, a variety of specialist asset classes, and a wide range of industries.
Your fund manager will supply you with reports on how your funds are performing but won’t be able to influence any investment choices save for moving it entirely to somewhere else. It doesn’t matter if you only have a small amount to invest, you still have the option to spread it across different asset classes, countries, and stock market sectors. The focus of funds is to help grow and generate income.
Tax-efficient wrappers
Another benefit to funds is that they are tax-efficient. You can switch between shares within funds and not worry about having to pay capital gains tax (CGT). This is not the case if your portfolio is full of shares unless they are held in tax-efficient wrappers like Individual savings accounts (ISAs).
There are two main structures of funds – open ended and closed ended. Open-ended funds are split between unit trusts and open-ended investment companies (OEICS), while closed-ended funds contain investment trusts.
Open-ended funds
With open-ended funds, you can invest in or redeem cash at any time. Because fund managers create units for new investors and cancel them once they’re redeemed, the size of the fund can fluctuate depending on investor demand. They are open to subscriptions and redemptions.
Closed-ended funds
Also knowns as investment trusts, closed-ended funds are organised as listed companies and trade just like any other equity on the stock market. The reason they’re “closed” is because once they’re set up they aren’t typically open to subscriptions or redemptions and they have a limited amount of share available so buying and selling can’t be done on the open market.
Prices are determined by investor demand along with the gains and losses in the underlying assets. So the price you pay for a share could actually be more or even less than it’s actually worth. This is beneficial for a fund manager because it helps stabilise the amount of money with which they invest.
Help is available
No matter what your financial goals are — growing capital, generating income, or merely preserving wealth, working with professionals who are experts in their field could make all the difference. Get in touch with a financial adviser to discuss your requirements. Or to find out more about our services, get in touch with us to get started.
