Choosing any investment involves striking the right balance between risk and potential reward – as well as assessing financial capacity (affordability) to absorb potential losses. Typically, if the level of risk taken is low, the return should also be expected to be low, whereas if the level of risk is higher there is greater potential to make a better return over time – but there is also a greater potential for falls, especially in the shorter term.
The longer the timescale, the longer investments have for market fluctuations to even out. This is why many people turn to higher risk investments to help to potentially grow their capital in order to meet longer term objectives such as retirement. However, if the investment falls in price, investors need the financial capacity (affordability) to stay invested to give it the chance to recover rather than lock in any losses.
The main types of asset are equities, fixed interest securities (bonds) and property. Each has different characteristics but, unlike cash, they can fall as well as rise in value and you may not get back what you originally invested. History shows that over the long term (i.e. decades) the stock market (representing shares in individual companies) is typically the most volatile of these asset classes but has also provided the best overall returns; but mixing shares with other asset classes may lower short term volatility while still providing reasonable returns.
The objective of the MI Charles Stanley Monthly High Income Fund is to generate a high income with the potential for capital growth. To try and achieve this objective the fund must take some investment risk. The fund is expected to have a similar level of risk to Charles Stanley Multi Asset 2 Cautious Fund, which aims to deliver an overall investment return of inflation (as measured by the UK Consumer Prices Index) plus 1% a year, over a 5-year period.
The MI Charles Stanley Monthly High Income Fund is constrained in terms of the quantity of equities it can hold. The maximum is 35%, and the bias in favour of bonds over equities means it is aimed at investors with a medium-low risk outlook.
The fund is subject to market fluctuations and can fall in value as well as rise. If you are unsure about investing you should consider taking regulated financial advice.