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Investments

INVESTMENT STRUCTURES AND TYPES OF INVESTMENT MANAGER EXPLAINED

We help demystify the different types of asset classes and investment styles.

Certain investment structures let you invest in markets which wouldn’t otherwise be possible because of the size of the minimum investment. They allow you to hold a diverse portfolio of assets without needing a large minimum investment. The most common investment structures are OEICs (Open Ended Investment Companies), Unit Trusts, CIFs (Common Investment Funds) and Investment Trusts.

As well as thinking about which investment structures are best for your organisation, you’ll need to select a specific type of fund, such as:

Your selection of fund types will depend on your choice of asset classes and investment styles (what do these terms mean?) Different investments suit different investors, so it’s important to get advice from an independent financial advisor. To find one in your area, visit www.vouchedfor.co.uk.

SINGLE-ASSET FUNDS

Single-asset funds are focused on one type of asset alone – such as European equities, emerging market debt or smaller companies.

When you invest in a single-asset fund, you’re essentially investing in the specialist expertise of the fund manager: with an in-depth knowledge of the market they cover, the fund manager should be well placed to select investments that they believe have a good chance of outperforming against an appropriate benchmark.

Putting together a well-diversified portfolio using single-asset funds alone typically takes hard work on your behalf. You’ll also need to choose fund managers and monitor their performance.

MULTI-MANAGER FUNDS

Multi-manager funds are a type of actively managed fund, where a fund manager invests in different underlying funds run by different individual fund managers. In a nutshell, multi-manager funds are your ready-made route to a diversified portfolio.

One big advantage of multi-manager funds is that they give experienced fund managers the power to manage their specialist asset class – instead of one manager running a whole portfolio. This cuts down your exposure to manager risk, and means that your investments can benefit from industry insights that aren’t always accessible to individual investors. However, because of the extra layers of management that come as part of the package, multi-manager funds often have higher charges.

MULTI-ASSET FUNDS

Multi-asset funds enable the manager to invest across several different asset classes to create a diversified portfolio that spreads risk and keeps the impact of market dips to a minimum. The fund manager builds your portfolio from a combination of different asset classes with the aim of achieving the fund’s specific investment goals. This cuts down the decision-making from your side, but you’re putting your trust in the accuracy of your fund manager’s view on the market – and their ability to reflect that view in their investment strategy.

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CAF Financial Solutions Limited (CFSL) is authorised and regulated by the Financial Conduct Authority under registration number 189450. Registered office is 25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA. CFSL is a subsidiary of Charities Aid Foundation (registered charity number 268369).

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