Fund 101

Beginner's guide to investing in funds

Equities, foreign exchanges, bonds and commodities are all investment options. As an investment beginner, there is a lot to know when it comes to which stock to pick, what kind of currency to buy, or which sovereign bond is the least risky. In this case, why not start from investment funds? Let's take a glance at fund features and advantages of fund investment.

What is a fund?

Investment fund is an investment vehicle, managed by fund managers, that pools together capital from many investors to invest in a range of assets such as bonds, stocks and money market instruments. 

Investment fund features and advantages

Professional management by a fund manager

The composition and investment portfolio of each investment fund is selected and managed according to the investment goals, economic, market trend and conditions through fundamental and technical analysis, in order to manage the risks and in an attempt to generate returns.

Making small investments in a big world

Options for investment funds are either monthly plan (MIP) or lump sum investment. They are not limited to premium investors and it costs less to start than you may think. Investment funds pool capital from a group of investors, therefore even for ordinary investors with a relatively small amount of money, they can invest in various assets of different sectors and geographies through capital aggregation. The entry threshold for most investment funds platforms is not high. For example, the entry threshold of “SimplyFund” is as low as HKD 1, providing an affordable way for fund investment beginners to start investing in funds. 

Diversification

The conventional wisdom has taught us not to put all our eggs in one basket. Compared with direct subscription of assets like single equity and foreign currency which could be affected by political, economic or market factors, investment funds may be better at risk diversification by offsetting the losses with profits gained from other stocks. Some funds are even able to do cross-border investments to diversify risks across different geographic regions.

Global investment

It is comparatively difficult for investment beginners or general investors to invest directly in overseas assets, yet in the world of fund investment, the portfolio of regions can be formed in many ways, including the Greater China market, developed markets such as Europe and the United States, as well as emerging markets like India, Vietnam, Indonesia and Latin America. Besides geographies, there are a wide variety of sectors available. By industry, stocks can be categorised into healthcare, technology and property, etc. Bonds can also be divided into sovereign bonds and corporate bonds.

Flexibility

Investors can buy or sell investment funds on any dealing day though different platforms and channels. On the other hand, although investment funds should be considered a medium to long-term investment, there is no penalty when the investors sell their investment funds. Investors should always make their investment decisions based on their own circumstances.

Tips for investment fund beginners: How to invest in the right fund

Understand your risk tolerance level and the risk level of your interested fund

As an investment beginner, you can complete the Risk Profiling Questionnaire to assess your risk tolerance level. The assessment is graded from conservative to aggressive. You may take the results as a reference to identify suitable investment funds.

Evaluate fund performance

Fund's performance and return depend on the fund manager’s ability in investment allocation and decision-making. You may take its past performance as reference, for example, its performance in different market scenario and relative performance compared with funds of same type. However, please take note that past performance is not indicative of future performance.

Understand funds’ objective and their asset allocation

Investment funds can be divided into equity funds, bond funds, and balanced funds. Theoretically, equity funds carry the highest potential returns and also the highest risks, which may effectively help with capital appreciation in a bullish market. Bond funds are the most conservative ones, while balanced funds have relatively balanced the return and risk. Both of them may be more defensive in a volatile market. You should read the Offering Documents to understand the fund's objective.

Consider the relevant fees

In general, fund houses and distributors may charge investors subscription fee, redemption fee and management fee. If 2 funds have similar performances, their relevant fees may affect your return of the funds. All fees and charges are clearly and explicitly listed out in the Offering Documents. You don't need to worry about any hidden charges.

Explore our products

Investment Funds

  • Online subscription as low as HKD5,000
  • Capture global investment opportunities
  • Diversified risk by including various underlying assets in one fund
Investment involves risks.

SimplyFund

  • Start your fund investment with HKD 1 only and enjoy monthly fee as low as HKD 0
  • Diversified funds for your selection
  • Enjoy a wealth of useful knowledge on our simple platform
Investment involves risks.

MaxiInterest Investment Deposit

  • Potential higher interest return than normal time deposits with favoured market price movement
  • Potential to exchange up to 10 different currencies at a more preferable rate than spot rate
  • Investment tenor from 1 week to 3 months
This is a structured product involving derivatives. The maximum potential gain is limited to the pre-agreed interest rate. Investment involves risks. Price of FX exchange may go up or down. You should read and understand all the relevant product documents/service terms and conditions and risk disclosure statements before making any investment decision.

Capital Protected Investment (CPI) Deposit

  • Invest online with just HKD5,000
  • 100% capital protection at maturity
  • Invest for as short as 2 months with no handling fee
  • A variety of underlying currency pairs
This is a structured product involving derivatives. The maximum potential gain is limited to the pre-agreed interest rate. Investment involves risks. Price of FX exchange may go up or down. You should read and understand all the relevant product documents/service terms and conditions and risk disclosure statements before making any investment decision.

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Footnote

Other point(s) to note

  1. All investments involve risks (including the possibility of loss of the capital invested). Prices of securities and investment products may go up as well as down and may even become valueless. Past performance information presented is not indicative of future performance. The risk disclosure statements and the offering documents of the relevant securities and investment products should be read in detail before making any investment decision.
  2. Investors should note that all investments involve risks (including the possibility of loss of the capital invested), prices of fund units may go up as well as down and past performance information presented is not indicative of future performance. Investors should read carefully and understand the relevant fund's offering documents (including the fund details and full text of the risk factors stated therein (in particular those associated with investments in emerging markets for funds investing in emerging markets)) before making any investment decision.