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Thursday, January 18, 2007

Balancing Needs & Risks in Unit Trust Investment

Investors who are not far from retirement are a cautious group, and with good reason too. They know they need to carefully balance their investment weightings of stocks and bonds to keep their nest egg growing – but without too much risk. That’s where balanced funds come in. Balanced funds are funds that invest in a diversified portfolio of common stock, preferred stocks, bonds and sort-term bonds, to provide both income and capital growth while avoiding excessive risks.

For the balanced funds, the ratio of stocks to bonds is determined by the fund’s objective and the fund manager. On the average, their ratio of stocks to other investments is approximately 60:40. Managers of balanced funds can, however, shift ratio one way or the other to take advantage of high interest rates or stock market growth. These funds may be equity-oriented and skewed toward stocks, or income-oriented and skewed toward bonds. For Full Article Click Here

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