The point of this website is to help you to make your own decisions. If you are not sure what you are doing then please get in touch with a financial adviser.
With the small print out of the way – the investment company sector can offer solutions for most investment needs.
The universe of investment companies is subdivided into sectors (yes we realise that this is a bit confusing as people use the term “sector” to apply to different industries as well). The investment company sectors are usually defined by what type of what type of assets the investment company is invested in (equities, bonds, property etc.), where the investments are and what the investment company is trying to achieve – growth, growth & income and income. When you are deciding where to put your money you will probably be asking yourself what do I want to achieve? – and, depending on your stage in life, you will probably be asking yourself do I want growth? growth and income? or just income?
The differences between them may be fairly obvious but growth funds try to generate all of their return through an increase in the capital value of their investments. They may be invested in assets that do not produce an income (like companies that are not paying dividends because they are currently loss-making, companies that are reinvesting all their profits to expand their businesses or property under construction). Generally, though not always, growth funds are riskier than average because the value of their investments is more dependent on hope value – what the investment might be worth in the future if everything goes to plan – and plans do not always turn out the way you anticipate.
Growth & Income funds tend to be invested in assets that are generating an income (like a company paying dividends or a property that is rented out) but where there is also a chance of capital gain. These sorts of assets tend to be, but are not always, less risky than average because even if capital values are falling, at least you can rely on the income to tide you over until things recover. However it is worth bearing in mind that, as an example, some companies cut their dividends because they are struggling to make money and often the capital values of these fall too – so these investments are not a one-way bet.
Income funds tend to be invested in assets that are generating an income, usually higher than the income from a growth & income investment, but where there is a low or no chance of generating capital growth (like an investment in a bond). With no capital growth to fall back on, any fall in the income is bad news so income investments can look as though they are low risk but can catch you out. Also income investments are valued in relation to what you could get by doing something safer with your money (like buying a government bond – though not all of these are low risk – or putting your money on deposit in a bank). If the return you can get from a safer investment rises then the return on the income fund is relatively less attractive (unless it rises by a similar amount). It is worth checking whether the returns on an income fund are sensitive to moves in interest rates.
The data feeds section of the website is designed to help you choose between funds. They are arranged into sectors so you can compare like with like.
You can rank the funds by a number of criteria such as performance, fees, gearing (how much they have borrowed) and yield.
Once you have selected a fund, you can click on the name of it to see more information on it. You can also find these pages by searching for the company name or the three/four letter company code we use throughout the site. You can read about how these pages work here.
Where we have published our own research on some of these funds, we’ll flag this up. This goes into how the fund works in much more detail.