Mutual Funds

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Mutual Fund Fundamentals

There is a popular saying which states “Never put all your eggs in one basket.” This wisdom is quite applicable when it comes to management of your investments. No matter how confident you are in a particular investment it is always wise to spread your funds around to avoid significant exposure to any one investment product.  This concept is exemplified by the mutual fund investment.

The concept behind a mutual fund is simple. Rather than make an investment in one company, an investor places his funds with a company which pools investors’ funds and invests it based on certain agreed specifications. The fund employs the services of a team of professionals who research the various instruments for example stocks, bonds or other assets and then places the money as wisely as they can across multiple investments.

For their role, the mutual fund company charges an annual fee which is deducted from the pool of funds.  While this reduces the total return of the fund, this is a trade off for the professional direction and instant diversification which comes with the mutual fund investment.

In Barbados companies need to be registered with the Financial Services Commission in order to offer mutual fund investments to the general public. Presently the major providers are

  • Fortress Fund Managers
  • Republic Finance & Trust (Barbados) Corporation
  • Royal Fidelity Merchant Bank & Trust Ltd.
  • Sagicor Asset Management Inc.

When making a decision about a choice of fund to invest in for mutual funds, it is important that you:

  1. Understand the objectives of the fund and
  2. Understand how the fund has performed in the past

 While we at SigniaGlobe can assist in providing general information on the objectives of the fund the prospectus of the fund would be the most comprehensive source.  In it information can be found on whether the fund is  an open or closed-ended fund, the type of fund, what it chooses to invest in and its valuation cycle. The latest prospectus for each fund would be found on their website.

We hope you’ve enjoyed this article. Feel free to give us a call at 434-2363 to discuss how our experienced brokers can assist you with reaching your investment goals today.

© 2019 Signia Financial Group Inc. All Rights Reserved.

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