MARKET ANALYSIS

Market Analysis for Private Investors

Market Analysis for Private Investors

Introduction

Collective investment works over the principle of spreading your investment over a range of different products that will protect the money of the investor that is better than placing al your money at one place of the financial market. While this will cost a lot of money if someone is investing as an individual, in the collective investment it enables to spread your investments through the pooling of investor's money.

A scheme of a collective investment is a means through which money is invested next to other investors to derive the advantage from the intrinsic benefits for working as being a part of any group. These benefits include the ability to hire any investment manager who works in a professional capacity, which offers theoretically the prospects of better management of risk or better returns.

The terminology differs country to country but the scheme of collective scheme is referred often as mutual funds, managed funds, investment funds or simply just funds. All around the globe large markets do develop around the collective investment and this account for the considerable portion of the every trading over a major part of stock exchange.

Collective investments do get promoted through a wide variety of investment aims through targeting particular geographic regions or some particular sectors of industry. Depends over the country there is usually a bias with regards to the domestic market in order to reflect the national self-interest which are perceived by the makers of policy, with insufficient risk of currency and familiarity. Funds are selected often selected over the basis of these particular investment objectives, their past history and some other elements like fees.

The potential of the collective schemes of investment is enormous. It provides a way for general public to invest their money into the stock exchange in order to beat the inflation through good returns. Many people don't got the vague idea of what the collective investments are. In some way they could be described as a group consisting of people investing in the shared interest. The area of collective investment is very wide that it could be overwhelming because of different types of funds.

Discussion

In this paper, it will be a detailed discussion over comparison between the two portfolios as mentioned in the case. In this case it is mentioned that Mr. Peter bought £10,000 each of Vodaphone Group, HSBC Holdings and British American Tobacco ordinary shares and Mr. James invested £30,000 into Aberdeen UK Equity Income an OEIC. Appropriate techniques and tools would be used to evaluate the performance of both the portfolios.

But before that we are going to look at the advantages and disadvantages of having collective investment.

Advantages of Portfolio Investment

Risk Reduction and Diversification

The major benefit of portfolio investment or collective investment is about the reduction of risk instead of increasing the returns based over the security analysis which exceeds the returns from the collective investment. Whatsoever, over the period of long run, collective investment will be able to deliver the ...