Investment Strategies

Investment strategies areconsidered to have more branches of finance rather than economics. Forinstance, to make an investment in mutual fund has recently become a good andsensible investment strategy.

Different Kinds of Investment Strategies:

?

Discussed below are the differentkinds of investment strategies:

Passive Investment Strategy:

This strategy is also termed as passivemanagement, where a finance manager makes a few portfolio choices to minimizetransactional cost of a firm. Passive investment strategy is more common on theshare market industry, but is also becoming more popular in other investmentkinds such as bonds, hedge funds and commodities. Today, multitudes of marketindexes exist in the world and hundreds of varied index funds are trackingthem. The Vanguard 500 is one of the best and largest mutual fund organizationsthat have adopted this strategy. The other two popular companies that adoptedthis strategy are State Street, and Barclay's GlobalInvestors.?

Active Investment Strategy: ?

This strategy helps to maximizethe return on investment. It involves making decisions on purchase or sale ofstocks by foreseeing future market price for those stocks. Usually, theprediction of stock market is based on a viewpoint of economic or marketcondition that results from fundamental or technical analysis. Thus, thisinvestment strategy is totally based on an outlook of an aggregate marketrather than a specific stock.

Buy & Hold:

This is a long term investmentstrategy based on the business concept that, the long term financial marketoffers an excellent rate of return on investment, despite the period of declineor volatility. In addition, this outlook holds the concept of market timingthat involves buying at low price and selling at high price. The retail and smallerinvestors more typically make use of this strategy in real estate investment,where an asset holding period is normally the lifespan of that mortgage.? ?

Overview:

The best and profitableinvestment strategy is the mutual fund investment. Mutual fund is a pool ofwealth supplied by varied investors and consecutively used by mutual fund firmto invest in different assets including stocks, shares and bonds. However, athorough research has to be conducted to select a mutual fund firm and onlythose firms have to be considered that have certified investment manager. Thisensures the mutual funds transfer towards an ideal investment.

This strategy also applies for stockmarket investment, where investment decisions need to taken through a detailedresearch on the current and past trends of the stock market price and NAV (NetAsset Value). Evaluation from stock market professionals about the futureprediction can also be considered otherwise profit from capital gaindistribution, dividends, and capital appreciation may not be earned.