Investment aims and Benchmarking

Each fund has a defined investment goal to describe the remit of the investment manager and to help investors decide if the fund is right for them. The investment aims will typically fall into the broad categories of Income (value) investment or Growth investment. Income or value based investment tends to select stocks with strong income streams, often more established businesses. Growth investment selects stocks that tend to reinvest their income to generate growth. Each strategy has its critics and proponents; some prefer a blend approach using aspects of each.

Funds are often distinguished by asset-based categories such as equity, bonds, property, etc.

Also, perhaps most commonly funds are divided by their geographic markets or themes.

Examples

* The largest markets - U.S., Japan, Europe, UK and Far East are often divided into smaller funds e.g. US large caps, Japanese smaller companies, European Growth, UK mid caps etc.
* Themed funds - Technology, Healthcare, Socially responsible funds

In most instances whatever the investment aim the fund manager will select an appropriate index or combination of indices to measure its performance against; e.g. FTSE 100. This becomes the benchmark to measure success or failure against.

Active or passive management

The aim of most funds is to make money by investing in assets to obtain a real return (i.e. better than inflation).

The methods used to make your investment vary and two opposing views exist.

Active management - Active managers believe that by selectively buying within a Financial market that it is possible to outperform the market as a whole. Therefore they employ dynamic portfolio strategies buying and selling investments with changing market conditions.

Passive management - Passive managers believe that it is impossible to predict which individual holdings or section of the market will perform better than another therefore their portfolio strategy is determined at outset of the fund and not varied thereafter. Many passive funds are index trackers where the fund tries to mirror the market as a whole. Another example of passive management is the "buy and hold" method used by many traditional Unit Investment Trusts where the portfolio is fixed from outset.

An example of active management success

* In 1998 Richard Branson (head of Virgin) publicly bet Nicola Horlick (head of SG Asset Management) that her SG UK Growth fund would not beat the FTSE 100 index, nor his Virgin Index Tracker fund over three years, nor achieve its stated aim to beat the index by 2% each year. He lost and paid £6,000 to charity.

Alpha, Beta, R-squared and standard deviation

When analysing investment performance, statistical measures are often used to compare 'funds'. These statistical measures are often reduced to a single figure representing an aspect of past performance:

* Alpha represents the fund's return when the benchmark's return is 0. This shows the fund's performance relative to the benchmark and can demonstrate the value added by the fund manager. The higher the 'alpha' the better the manager. Alpha investment strategies tend to favour stock selection methods to achieve growth.

* Beta represents an estimate of how much the fund will move if its benchmark moves by 1 unit. This shows the fund's sensitivity to changes in the market. Beta investment strategies tend to favour asset allocation models to achieve outperformance.

* R-squared is a measure of the association between a fund and its benchmark. Values are between 0 and 1. Perfect correlation is indicated by 1, and 0 indicates no correlation. This measure is useful in determining if the fund manager is adding value in their investment choices or acting as a closet tracker mirroring the market and making little difference. For example, an index fund will have an R-squared with its benchmark index very close to 1, indicating close to perfect correlation (the index fund's fees and tracking error prevent the correlation from ever equalling 1).

* Standard deviation is a measure of volatility of the fund's performance over a period of time. The higher the figure the greater the variability of the fund's performance. High historical volatility may indicate high future volatility, and therefore increased investment risk in a fund.

Types of risk

Depending on the nature of the investment, the type of 'investment' risk will vary.

A common concern with any investment is that you may lose the money you invest - your capital. This risk is therefore often referred to as capital risk.

If the assets you invest in are held in another currency there is a risk that currency movements alone may affect the value. This is referred to as currency risk.

Many forms of investment may not be readily salable on the open market (e.g. commercial property) or the market has a small capacity and investments may take time to sell. Assets that are easily sold are termed liquid therefore this type of risk is termed liquidity risk.

Note that the investor is indifferent to the type of risk, and should not care whether a loss comes from capital risk, currency risk, or liquidity risk - a loss is a loss.

Collective Investment Scheme

A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than those feasible for most individual investors, and to share the costs of doing so.

Terminology varies with country but collective investment schemes are often referred to as investment funds, managed funds, mutual funds or simply funds (note: mutual fund has a specific meaning in the US). Around the world large markets have developed around collective investment and these account for a substantial portion of all trading on major stock exchanges.

Collective investments are promoted with a wide range of investment aims either targeting specific geographic regions (e.g. Emerging Europe) or specified themes (e.g. Technology). Depending on the country there is normally a bias towards the domestic market to reflect national self-interest as perceived by policy makers, familiarity and the lack of currency risk. Funds are often selected on the basis of these specified investment aims, their past investment performance and other factors such as fees.

Constitution and terminology

Collective investment schemes may be formed under company law, by legal trust or by statute. The nature of the scheme and its limitations are often linked to its constitutional nature and the associated tax rules for the type of structure within a given jurisdiction.

Typically there is:

* A fund manager or investment manager who manages the investment decisions.
* A fund administrator who manages the trading, reconciliations, valuation and unit pricing.
* A trustee or board who safeguards the assets and ensures compliance with the laws and rules.
* The shareholders or unitholders who own (or have rights to) the assets and associated income.
* A "Marketing" or "Distribution" company to promote and sell the fund.

Please see below for general information on specific forms of scheme in different jurisdictions.

Net asset value

The Net Asset Value or NAV is the value of a scheme's assets less the value of its liabilities. The method for calculating this varies between scheme types and jurisdiction and can be subject to complex regulation.

Open-ended fund

An open-ended fund is equitably divided into shares which vary in price in direct proportion to the variation in value of the funds net asset value. Each time money is invested, new shares or units are created to match the prevailing share price; each time shares are redeemed the assets sold match the prevailing share price. In this way there is no supply or demand created for shares and they remain a direct reflection of the underlying assets.

Closed-ended fund

A closed-end fund issues a limited number of shares (or units) in an initial public offering (or IPO). The shares are then traded on an exchange or directly through the fund manager to create a secondary market subject to market forces. If demand for the shares is high, they may trade at a premium to net asset value. If demand is low they may trade at a discount to net asset value. Further share (or unit) offerings may be made by the scheme if demand is high although this may affect the share price.

The added element of market forces tends to amplify the performance of the fund increasing investment risk through increased volatility.

Gearing and leverage

Some collective investment schemes have the power to borrow money to make further investments; a process known as gearing or leverage. If markets are growing rapidly this can allow the scheme to take advantage of the growth to a greater extent than if only the subscribed contributions were invested. However this premise only works if the cost of the borrowing is less than the increased growth achieved. If the borrowing costs are more than the growth achieved a net loss is made.

This can greatly increase the investment risk of the fund by increased volatility and exposure to increased capital risk.

Gearing was a major contributory factor in the collapse of the split capital investment trust debacle in the UK in 2002.

Availability and access

Collective investment schemes vary in availability dependent on their intended investor base.

* Public Schemes - are available to most investors within the jurisdiction they are offered. Some restriction on age and size of investment may be imposed.
* Limited availability schemes - are limited by regulation or scheme rules to experienced investors and often have high minimum investment requirements. Hedge funds are often restricted this way.
* Private schemes - may be limited to family members or whoever set up the fund. They are not publicly quoted and often are arranged for tax or estate planning purposes. A Private equity fund is an example of this type of arrangement.

Limited duration

Some schemes are designed to have a limited term with enforced redemption of shares or units on a specified date.

Unit or Share Class

Many collective investment schemes split the fund into multiple classes of shares or units. The underlying assets of each class are effectively pooled for the purposes of investment management, but classes typically differ in the fees and expenses paid out of the fund's assets.

These differences are supposed to reflect different costs involved in servicing investors in various classes; for example:

* One class may be sold through broker or financial adviser with an initial commission (front-end load) and might be called retail shares.
* Another class may be sold with no commission (load) direct to the public called direct shares.
* Still a third class might have a high minimum investment limit and only be open to financial institutions, and called institutional shares.

In some cases, by aggregating regular investments by many individuals, a retirement plan (such as a 401(k) plan) may qualify to purchase "institutional" shares (and gain the benefit of their typically-lower expense ratios) even though no members of the plan would qualify individually.

Diversity and risk

One of the main advantages of collective investment is the reduction in investment risk (capital risk) by diversification. An investment in a single equity may do well, but it may collapse for investment or other reasons (e.g., Marconi, Enron). If your money is invested in such a failed holding you could lose your capital. By investing in a range of equities (or other securities) the capital risk is reduced.

* The more diversified your capital, the lower the capital risk.

This investment principle is often referred to as spreading risk.

Collective investments by their nature tend to invest in a range of individual securities. However, if the securities are all in a similar type of asset class or market sector then there is a systematic risk that all the shares could be affected by adverse market changes. To avoid this systematic risk investment managers may diversify into different non-perfectly-correlated asset classes. For example, investors might hold their assets in equal parts in equities and fixed income securities.

Reduced dealing costs

If one investor were to buy a large number of direct investments, the amount they would be able to invest in each holding is likely to be small. Dealing costs are normally based on the number and size of each transaction, therefore the overall dealing costs would take a large chunk out of the capital (affecting future profits). Pooling money with that of other investors gives the advantage of buying in bulk, making dealing costs an insignificant part of the investment.

Generic information - disadvantages

Costs

The fund manager managing the investment decisions on behalf of the investors will of course expect remuneration. This is often taken directly from the fund assets as a fixed percentage each year or sometimes a variable (performance based) fee. If the investor managed their own investments, this cost would be avoided.

Often the cost of advice given by a stock broker or financial adviser is built into the scheme. Often referred to as commission or load (in the U.S.) this charge may be applied at the start of the plan or as an ongoing percentage of the fund value each year. While this cost will diminish your returns it could be argued that it reflects a separate payment for an advice service rather than a detrimental feature of collective investment schemes. Indeed it is often possible to purchase units or shares directly from the providers without bearing this cost.

Lack of choice

Although the investor can choose the type of fund to invest in, they have no control over the choice of individual holdings that make up the fund.

Loss of owner's rights

If the investor holds shares directly, they may be entitled to shareholders' perks (for example, discounts on the company's products) and the right to attend the company's annual general meeting and vote on important matters. Investors in a collective investment scheme often have none of the rights connected with individual investments within the fund.

Net asset value

Net Asset Value (NAV) is a term used to describe the value of an entity's assets less the value of its liabilities. The term is commonly used in relation to collective investment schemes. It may also be used as a synonym for the book value of a firm.

For collective investment schemes (such as US mutual funds and hedge funds), the NAV is the total value of the fund's portfolio less its liabilities. Its liabilities may be money owed to lending banks or fees owed to investment managers, for example.

For companies, the NAV is the value of its assets less its liabilities.

For the valuation of assets and liabilities, different methods are used depending upon the circumstances, the purposes of the valuation or the regulations that may apply. For funds, the most common method of valuation is to use the market value of the assets. Other possible methods of valuation are:

* Book value
* Historical cost
* Amortised cost

Funds

For open-end funds, shares and interests are not traded between investors but are issued and redeemed directly between the fund and the investor. The price of those shares or interests in the fund is determined by the NAV at the time when the investor subscribes for them or withdraws his investment.

In contrast, closed-end funds are traded in the open market between investors and so the price of shares or interests in a closed-end fund will be whatever the parties agree to be the price, and might not correspond to the fund's NAV.

Companies

In determining whether a company is a cheap or expensive investment, one tool used by investors is a comparison of the company's current market capitalization (being the price that the market values the company at) with its NAV. The NAV will usually be below the market price for the following reasons:

* The NAV describes the company's current asset and liability position. Investors might believe that the company has significant growth prospects, in which case they would be prepared to pay more for the company than its NAV.

* The current value of a company's assets may be higher than the historical financial statements used in the NAV calculation.

* Certain assets, such as goodwill (which broadly represents a company's ability to make future profits), are not necessarily included on a balance sheet and so will not appear in an NAV calculation.

A company's market value will not always be above its NAV. For example, analysts and management estimated that Liberty Media Corporation was trading for 30-50% below its net asset value (or "core asset value") in June 2007. Where a company's market value is lower than its NAV, it may be considered more profitable to wind the company up and sell off its assets individually rather than continue to run it as a going concern.

Mutual Fund

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. Currently, the worldwide value of all mutual funds totals more than $26 trillion.

Since 1940, there have been three basic types of investment companies in the United States: open-end funds, also known in the US as mutual funds; unit investment trusts (UITs); and closed-end funds. Similar funds also operate in Canada. However, in the rest of the world, mutual fund is used as a generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment companies (OEICs), unitized insurance funds, and undertakings for collective investments in transferable securities (UCITS).

Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924, and, after one year, it had 200 shareholders and $392,000 in assets. The entire industry, which included a few closed-end funds represented less than $10 million in 1924.

The stock market crash of 1929 hindered the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the Securities and Exchange Commission (SEC) and provide prospective investors with a prospectus that contains required disclosures about the fund, the securities themselves, and fund manager. The SEC helped draft the Investment Company Act of 1940, which sets forth the guidelines with which all SEC-registered funds today must comply.

With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s, there were approximately 270 funds with $48 billion in assets. The first retail index fund, First Index Investment Trust, was formed in 1976 and headed by John Bogle, who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University. It is now called the Vanguard 500 Index Fund and is one of the world's largest mutual funds, with more than $100 billion in assets.

A key factor in mutual-fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual retirement accounts (IRAs). Even people already enrolled in corporate pension plans could contribute a limited amount (at the time, up to $2,000 a year). Mutual funds are now popular in employer-sponsored "defined-contribution" retirement plans such as (401(k)s) and 403(b)s as well as IRAs including Roth IRAs.

As of October 2007, there are 8,015 mutual funds that belong to the Investment Company Institute (ICI), a national trade association of investment companies in the United States, with combined assets of $12.356 trillion.

Usage

Since the Investment Company Act of 1940, a mutual fund is one of three basic types of investment companies available in the United States.

Mutual funds can invest in many kinds of securities. The most common are cash instruments, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the shares of a particular industry, such as technology or utilities. These are known as sector funds. Bond funds can vary according to risk (e.g., high-yield junk bonds or investment-grade corporate bonds), type of issuers (e.g., government agencies, corporations, or municipalities), or maturity of the bonds (short- or long-term). Both stock and bond funds can invest in primarily U.S. securities (domestic funds), both U.S. and foreign securities (global funds), or primarily foreign securities (international funds).

Most mutual funds' investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts cash flows into and out of the fund by investors, as well as the future performance of investments appropriate for the fund and chooses those which he or she believes will most closely match the fund's stated investment objective. A mutual fund is administered under an advisory contract with a management company, which may hire or fire fund managers.

Mutual funds are subject to a special set of regulatory, accounting, and tax rules. In the U.S., unlike most other types of business entities, they are not taxed on their income as long as they distribute 90% of it to their shareholders and the funds meet certain diversification requirements in the Internal Revenue Code. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free municipal bond income are tax-free to the shareholder. Taxable distributions can be either ordinary income or capital gains, depending on how the fund earned those distributions. Net losses are not distributed or passed through to fund investors.

Gemini Horoscope & Astrology

Gemini symbolizes dual nature. Geminians have an easy acceptance of opposites. Geminians may like two things which may be opposite to each other.

You Geminians are curious, versatile, garrulous and have mental alacrity. Geminians, the champion among the cocktail party chatters, have the ease to bounce around from one topic to another. You are also a winner in lighthearted social encounters. For some the Geminian's company may seem to be fun while others may see Gemini as shallow due to their dexterity to change with the changing winds.

Your razor-sharp wit will have you verbally dueling with opponents, who after some moments are your best of friends. Do not fly speedily through life, take time to smell the flowers.

Gemini Key Planet: Mercury
Gemini is linked with Mercury, the planet of childhood and youth. It revolves around the Sun faster than any other planet. It symbolizes our thoughts and the way we communicate them. It symbolizes our alert and rational mind. This key planet of Gemini is impatient and changeable. It drives us to talk and also listen, but it may not necessarily lead you to action.

Third House: Communication
The third house symbolizes communication and all aspects related to it. According to traditional thought third house also includes the type of interactions which take place between siblings. It also is the representative of short-distance travel and trips.

Gemini Element: Air
The element of Gemini, air, represents movement. With an alert mind and a good command of language, the Geminians are born communicators. Geminians with their element of air are thinkers. They emphasize the intellect over other functions. As the breath of spring, they can be light and breezy, but their words can also carry the strength of a strong wind.
The air of Gemini keeps changing the directions. It's a metaphor for how our brain solves a puzzle with the help of different approaches.

Gemini Strength:
Geminiains greatest strength is inquisitiveness about various interests.

Gemini Weakness:
The most of the important tasks loose your focus and this becomes your weakness.

Taurus Horoscope

Taurians are known for their determination. Their ability to focus on the goals helps them to reach their destination. You may create a functional life for yourself due to your need for stability and simplicity, even though this life may seem boring to others. You don't give a bit to unnecessary risks which may place your solid footing in jeopardy.
Taurians may sometimes feel the necessity of taking care of the senses will make everything else take care of itself. It is probable that you get attracted more to the pleasure, material things bring to your senses and less towards the objects themselves. A good ambiance, which not only ensures comfortable living and working space, holds importance for Taurians. You want to make the environment lively with nice linens, clothing, food and music. A sensible outlook on life is the hallmark of this one of the most practical signs, Taurus. In your quest to get the things in order to survive, do bear in mind that there is a beauty beyond the material world of material possessions.

Taurus Key Planet: Venus
The second closest planet to the earth, Venus, is the planet of love and desire. She holds romance and beauty. But Venus is not only about physical love but also about ideal love. She represents the attraction we have towards the person we love. Venus is sensual and simple.

Second House: Possessions
The second house represents the things which we value. Its sphere includes personal possessions. A thing which holds personal value is related with the second house. It also represents those immaterial things which we value. Any thought about the most important thing for you or your own values represents thinking of your second house.

Taurus Element: Earth
The Earth signs are naturally practical. Accordingly, the Earth signs base their life on reality and not on fiction. Sensation is of more importance than thoughts or feelings. Earth signs live with their feet on the ground. Their sensibility draws others to seek their advice. The Earth signs believe that seeing is believing.

Taurus Strength:
A sensible outlook on life is the forte of the people born under Taurus.

Taurus Weakness:
Taurians shortcoming is that they can actually accept less than they deserve.

Aries Horoscope & Astrology

Aries are generally identified by their headstrong nature.
Leadership qualities are the forte of Arians. Courage reflects from the readiness, for action, in the people born under Aries. You will be pushed into a novel region due to your desire for excitement. Your confidence makes people follow you while you lead. You fight for anything which you believe to be important. It is not that Arians are intrepid. You remain committed to face your fears and defeat them. Difficulties may creep in due to impulsive actions. You could suffer due to false commencement as you do not collect sufficient information beforehand, probably due to your impetuous nature. In fact, you Arians are very good at starting things that you start working on your next project even before completing the previous one. Your maturity persuades you to slow down your reaction time to take time to think about the consequences of your actions.

Aries Key Planet- Mars
Mars, the God of war, is not only about fighting but also about going, going anywhere. We must fight with anyone who is an obstacle in our path, to keep the journey on. Mars is like the gas pedal of our bodies. It denotes the way we progress in life. Mars gives clues about the ways in which we manifest out basic energy. This key planet of Aries reminds us that "Try not. Do or do not. There is no try."

Aries First House: Self
The First House symbolizes our physical appearance to the world. It's not essentially who we are; it's what we bring to a situation and how we are perceived by others. It not only connotes our childhood but also the commencement of any activity or even the beginning of a new relationship.

Aries Element: Fire
A fire gives heat and also light. One candle can lighten up a room and it won't burn faster even if ten people read from its light. Fire never plans its next move. Fire burns the available fuel without judgment. Due to this reason fire signs can depend on their intuition and survival instincts.

Aries strength:
Your strong belief that courage is mastery of fear, is your strength. Your ability to overcome fear is your biggest strength.

Aries weakness:
Your weakness is that you cannot accomplish the tasks you begin.