https://highmark-funds.com/2021/12/23/market-risk-management-and-risk-calculations/
Investment and funds
An investment fund is an collective investment vehicle that pools the cash of investors to invest in a portfolio of bonds, shares or other assets. Each fund is managed by a person who decides what to purchase and sell, and also charges a fee for managing the fund. There are a variety of investment funds. They include unit trusts (UCITS), OEICs and open ended investments companies (OEIGCs).
When investing in funds it is essential to consider the motives behind it and how long you’d like to invest and also your profile as an investor that reflects your level of willingness to take risks. For instance, investors who are younger could have more time to invest and be more at ease taking on a greater risk level to ensure that they can grow over the long term.
Diversification is a great way to reduce your risk, just like saving. This means spreading your investments across a variety of asset classes that have lower correlations between their price fluctuations to ensure that any decline in value of one class can be offset by gains in another.
Smart beta or low-cost investment is another way to reduce risk. These are passively managed funds which attempt to replicate the fluctuations of a particular stock market index such as the FTSE 100, or S&P 500 without the need to make a judgement.