Do you want to invest in funds but don't know where to start? Learn more about the most common investment funds.
How should you choose an investment fund?
Funds allow you to invest without having to actively monitor the stock market, and they are a useful way to diversify your investments. But how should you choose the right investment fund? After all, there are equity funds, bond funds, real estate funds, and even funds that combine all of these things (mixed funds). Let us help you to pick a fund that matches your risk profile.
Adequate diversification (e.g. across multiple shares or bonds) is a crucial feature of a good investment. The combination of different types of investment (shares, bonds, real estate and cash) is also important, as the choice between shares and bonds alone will determine no less than half of your return.
Strategy funds base their ratio between shares, bonds and other investment types primarily on your risk profile (defensive, dynamic or highly dynamic). They attempt to achieve the best possible return while taking your profile into account. They do this based on the KBC investment strategy. A team of specialists closely monitor financial and economic developments, and each month they attempt to estimate how the economy will develop over the coming period. The distribution between different types of investment is determined based on this analysis, as well as the countries, sectors and themes that it would be best for you to invest in. In this way, your investment is adjusted each month without you having to do anything yourself.
Funds with floor monitoring
If you want to build in a little extra protection, you can also opt for a variant with floor monitoring. These funds aim to ensure that the value of your investment does not drop below a certain limit (95%, 90% or 85%) over a one-year period.
If the financial markets perform well then a fund of this kind will diversify in accordance with the KBC investment strategy. It will invest more cautiously where necessary in falling markets, and convert higher-risk investments (shares, bonds, real estate) into lower-risk investments (liquidities). Please note, however, that this floor does not constitute a guarantee of either the return or the redemption value.
This range chooses between shares and bonds based on their relative performance. This method is based on a specific ratio between shares and bonds. If bonds perform worse than shares (e.g. if interest rates gradually rise), then investments in shares will gradually be increased and investments in bonds decreased. Likewise, bonds will receive more attention if they appear to outperform shares.
The situation is reviewed each year, the investment method reverts to the initial ratio between shares and bonds, and the gradual increase and reduction can then start again from the beginning. Reverting to the initial ratio each year allows us to follow the stock market truism of 'buy low, sell high': we buy the cheaper option, whether bonds or shares, and sell the most expensive.
Investing in specific currencies or sectors
Would you prefer to place particular accents in your investment portfolio by investing in shares, US dollars, the technology sector, Japan or in areas such as family companies or high-interest bonds? Are you looking for an opportunity? Then you might be interested in the themes and accents we propose each month. Themes and areas of focus are investment opportunities which we expect to achieve higher returns than the wider market either in the short term (accents) or over the longer term (themes).
Funds with maturity dates
If you're looking for an investment with a pre-defined maturity date, then it's worth considering a structured fund. These are funds that respond to new developments and trends and which often offer a little extra, such as capital protection, an annual coupon, the opportunity to improve the starting value or a higher return.