I’m no expert – how do I choose the most appropriate investment solutions?

You’ve decided you’re all set and ready to invest in your future, but just what are you going to invest in? 

There are millions of different investments. You could invest in luxury goods or tech companies,  or even space exploration. But when you’re finding your feet as an investor, you probably want to stay a bit more down to earth. For everyone, a fund could be a good place to start.

The idea of a fund is to group different investments together under one purpose. 

Think of it as a ‘shopping basket’ of investments:

• A global technology fund, for example, might own shares in different technology companies across the world. 
• A multi-asset fund will hold a variety of investments, such as shares, bonds and real estate. 

When you buy shares in a fund, you own a small percentage of everything in it. This allows you to invest more widely and is a way to spread your risk more easily than if you bought, say, shares in a single company.

Active Funds:

• An active fund leverages on the experience and market insights of the management team that researches investment opportunities and monitors the investments in the fund. 
• The team ‘actively’ buys and sells investments and seeks to make a better return than the market while keeping risk under control but this is not always feasible

Passive Funds:

• A passive fund tracks the area of the market it has been programmed to track and will make a similar return as the market.    
• A passive fund is also run by a team but there is more emphasis on formulas and tracking. So, a passive fund tracking the top 500 companies in the US will make the same return that they do. 

Important points to keep in mind:

• Both types of fund come with management fees and these are generally lower for passive funds, but active funds rely on extensive market research and can potentially provide higher returns.
• As with all funds, they offer opportunities but also involve risks, such as possible price losses, capital loss or the loss of distributions.

• Understand where the fund invests (asset classes: equities, bonds, real estate etc) and what is the ideal time to be invested (time horizon)
• Check if this time horizon matches with your needs
• Understand the investment objective and the risks
• Check if the fund matches your values and your interests
• Check and compare costs¹
• Explore active and passive solutions
• Get advice from professionals
• Don’t forget, past performance does not allow any reliable conclusions to be drawn about the future development of investment funds, securities, indices or markets

Start simple as you build your knowledge.

¹ Information can be found in the legal documentation such as the prospectus or the PRIIPS KIID 

Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 08 May 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. 

Date of first use: 1 July 2024

Doc ID: 3566152

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