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Are Mutual Funds A Solution To Volatility And Uncertainty?

Are Mutual Funds A Solution To Volatility And Uncertainty?

Mutual funds are a simple and comfortable investment option because if you don’t have time or are not an expert in managing investments, you can let a trained person manage your resources.

In this article experts from SPV Mortgages tell the characteristics of Mutual funds, that will help you to understand why mutual funds are a popular option, with many facilities for people when they want to invest.

Liquidity

If you need your money urgently, you can request the redemption of the capital immediately. Thus, you should obtain it in a very short period of time, up to a maximum of ten days, according to the regulations of each fund.

Diversification

The funds have a portfolio specially designed to invest in different options, such as stocks, bonds, currencies, term deposits, or more.

In this way, it seeks to increase profitability without compromising risk to customers. Diversification is not only limited to options, but also to economic sectors, countries, and even investment terms.

Thanks to this, the offer of mutual funds in the market is enormous, since there are hundreds of different funds depending on the instrument or even depending on the country.

Managed by experts

By investing your capital in a fund, you give it to a group of market-savvy managers, who have the tools to make the best investment decisions.

Supervision and regulation

It is necessary to take into account some important details when choosing a mutual fund, such as the administrator’s remuneration and the commission for the placement and redemption of the capital, the redemption terms, its investment policy, its risks, and its classification.

In this way, you will know how much the fund manager charges for its services, in addition to the terms and risks that the fund handles and that will help you choose the most appropriate one.

The advantages of Mutual Funds as an investment alternative

Many think that Mutual Funds are made for people with large amounts of money, but this is just a myth. The truth is that it is a very safe, interesting, and versatile option to grow your money.

Today it is much more feasible for anyone to invest in Mutual Funds since it allows you to invest your money, although as far as possible it is advisable to invest a little more so that the long-term profitability term is longer.

With the payment of the bonus comes extra money for families that, if it should not be used for emergencies, can be invested.

Some other benefits of investing in Mutual Funds

1. Wide and varied range of funds

There are many types of funds (mixed, stock, private debt, among others), but they all generate some percentage of return.

Choosing the most suitable fund will depend on the profile of each client: if they are conservative or risky, or if they prefer to invest for two months or for ten years.

There are other factors that will also help define the profile and the choice of the fund, so it is important to have the advice of an expert.

2. Personalised advice

If you choose to invest in a fund manager, you will always have personalised advice from professionals who will help you define your investor profile and choose the fund or funds that can generate the best returns.

They will manage your investment, constantly analyse market conditions and opportunities, and will keep you up to date on the profitability of your fund through your account statement.

3. Accessible investment amounts

The amount to start investing in a Mutual Fund depends on the type of Fund. However, today it is possible to start investing in very low amounts. It is an excellent opportunity for extra money as a bonus or a withdrawal.

You can start with a small amount and deposit smaller amounts whenever you see fit. Your money will continue to grow, even if you don’t make bigger deposits.

4. Investment time

Mutual Funds have a less rigid permanence time than a fixed-term deposit, so you can dispose of your money easily, quickly, and comfortably.

In the case of alternative funds, the remaining needs to be invested in them between two and four years to generate higher returns, but in the case of other types of funds, it is also possible to have a shorter period of permanence.

5. Profitability

On average, the profitability of Mutual Funds commonly exceeds other savings and investment products. In general, in the market, the return of mutual funds has been double digits in the last year.

6. Diversification and international exposure

These types of instruments allow the correct diversification of your investments since they are exposed to international markets that are little or not affected by the risks of the local market.

Remember that a Mutual Fund is managed by a fund manager, so it is a fairly safe option to invest your money.

7. Managing volatility and financial uncertainty

You should learn to take advantage of market opportunities. Implement better tactics of risk management and flexibility, especially in downfall times where predictability in the impact of uncertainty and volatility in investments is essential.

The fundamental point is to know which fund to choose and which one to adjust to the time horizon and risk profile of the investor, which is why it stands out.

Mutual fund-based financial strategies have a significant advantage over the others, which is their high degree of diversification, flexibility, and liquidity. In this sense, despite the fact that these are a good option at any time of an economic cycle, be it expansive or contractive, these investments become more relevant in times of economic recession or volatility and uncertainty peaks close to historical maximums due to the favourable characteristics before mentioned.

In this way,  mutual funds manage to mitigate the risks and levels of uncertainty in the face of more volatile assets, complementing them with portfolios diversified by sector and location, with clear and relevant investment horizons. This will ensure that the level of risk-return is the most appropriate and adjusts to the risk profile of the client or investor.

Conclusion

In that sense, self-managed alternatives are highly recommended, that define a risk profile and where the investment team makes the movements in such a way that they can better take advantage of the market opportunities, with enough flexibility to make changes in terms of risks and choice of assets.

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