What are Mutual Funds?
Mutual Funds (sometimes called Unit trusts) are a medium-to long-term investment tool that gives investors the opportunity to diversify even a small investment in securities, bonds, currencies and commodities in markets around the world. If you invest in a Mutual Fund, your money is pooled with money from other investors and invested in a range of assets according to the fund's stated investment objective and investment approach. This range of investments is called a portfolio.
Why invest in Mutual Funds?
Diversification: You spread your investment across a diverse portfolio. This is usually safer than investing in a single share. Of course, levels of risk and return also vary among different funds.
Economies of Scale: With a large number of investors contributing to a single fund, operating costs and commissions can be optimized resulting in lower fees payable per investor.
Professional Management: Mutual Funds are managed by dedicated Fund managers who have in-depth knowledge of global markets and are experts in investment research and management.
Easy to start up: Generally, you can start investing with relatively small amounts.
Liquidity: You can buy and sell Mutual Funds on any dealing day (except on public holidays in the countries/regions to which your fund is linked). Your money need not be tied up for a specific period of time.
Access to Worldwide Markets: Your money can be invested in overseas markets.
What are the ways to invest in Mutual Funds?
Lump Sum investment: Currently you can make a one-time investment in a fund and take immediate advantage of the market situation.
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Are Mutual Funds suitable for everybody ?
Investing in funds may not be for everyone. For example, they may not be suitable if you:
- want potentially higher returns but are not prepared for variable returns which include the risk of losing a substantial part or all of the money you invested.
- do not understand how returns are calculated or are unclear about the factors and scenarios that can affect returns; do not understand a fund's investment objective, strategy or approach.
- do not understand the risks associated with the fund. Some funds use financial derivatives to hedge risks and/or to improve performance. Investors should be aware of the risks associated with the use of financial derivatives, including the risk that the provider (or counterparty) of the financial derivatives defaults.
- are not prepared to have your money tied up for long periods of time. As funds are exposed to market ups and downs, investors who stay invested long enough may be better able to ride out the downturns. For this reason, you should have adequate financial resources so that you won't have to redeem your funds during a market down turn.
- if you need to convert your investments to cash in the short-term to meet specific needs, some funds may not be suitable for you.
- are not familiar with the fund manager and fund's track record.
What are the Mutual Funds product offering documents?
In advance of making any investments you should read these documents carefully:
- Product Factsheet & Key Investor Information Document (KIID)
If you are in any doubt about any of the contents of the offering documents, you should take independent professional advice.
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Highlights for your best interest
What are the prerequisites to investing in Mutual Funds?
You need to have the following:
- an active HSBC UAE bank account
- an investment account with HSBC
- registered for Online Banking
Do I need to have a local HSBC UAE bank account to open an investment account with you?
Yes, it is compulsory to open a bank account with HSBC UAE should you wish to open an investment account with us. The benefit of having an account with HSBC UAE is that you are able to update the Direct or Credit Instruction to enable us to deposit your cash redemption proceeds to your designated bank account directly.
How can I invest in Mutual Funds?
If you have an existing Mutual Funds investment account and access to HSBC Online Banking:
- you may conveniently place your orders 24/7 through HSBC Online Banking
- orders placed at any time on a non-business day will be processed on the next business day
If you have an existing Mutual Funds investment account but no access to HSBC Online Banking:
- refer to the HSBC Online banking FAQ here
If you do not have an existing Mutual Funds investment account:
- speak to your relationship manager at our branches OR
- request a call back from one of our advisors by leaving your contact details here