Page 27 - Waterfall_Issue 6_2022

PHOTO BY JEREMY BEZANGER
Table 1: Asset classes versus investment investment, managerial and administrative services.
vehicles These investment vehicles benefit investors who prefer
Asset classes Investment vehicles not to be actively involved in investment decisions.
1. Equities/stocks 1. Investing in listed shares 3. Hedge funds: These are unlisted, pooled investment
2. Bonds 2. Unit trust funds/ETFs vehicles.
3. Real Estate 3. Hedge funds 4. Funds of funds: These are investment vehicles that
4. Cash 4. Funds of funds invest in other funds. They can be actively or passively
5. Managed accounts managed and offer the investor the ability to invest
6. Investment tax wrappers across fund managers who they believe will outperform
the market. This provides the investor with the
Investment vehicles are assets offered by the investment benefit of diversification of investment managers.
industry to help investors move money from the present 5. Managed accounts: Many investors contract with
to the future in the hope of increasing the value of their investment professionals/financial advisers to
money. Investment vehicles are entities that own other help manage their investments. These financial
investment vehicles – for example, an equity unit trust is advisers will make sure that they understand
an investment vehicle that owns shares. Point 1 below is the investor’s investment horizon, risk and goals,
an example of direct investments into listed securities, ensuring a suitable investment strategy match to
whilst points 2 – 6 are examples of indirect investments. deliver on the client’s investment objectives.
6. Investment tax wrappers: Investors who want to
Investment vehicles unpacked by the CFA provide for retirement can make use of tax wrappers.
Institute: Examples of tax wrappers are retirement annuities and
1. Investing directly in shares: This allows the investor more endowment policies. These are provided both locally
control over direct investments than indirect investment and offshore through financial service providers.
vehicles. Investors who choose to invest directly in listed
shares can determine stock entry levels and are in full A wide variety of investment vehicles and asset classes
control of investment decisions as highlighted in Section A. are available. These can be structured in various
2. Investing in unit trusts/ETFs: These are pooled ways to help meet the investment goals of different
investment vehicles that can be passively or actively individuals. To help you meet your investment needs, it’s
managed to track a particular index or sector. They are advisable to speak to a qualified financial adviser who
managed by investment professionals who provide can structure a financial plan and portfolio for you.

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