According to investment dictionary, “investment objective” is financial goal or goals of an investor. It will guides an investor to decide where to invest his or her money.
Normally, unit trusts or mutual fund describes its investment objective clearly in its prospectus. They also will identify the strategy the fund manager follows to meet that objective. Investors often look for funds whose stated objectives are compatible with their own goals.
Four most commonly used investment objectives are Capital Preservation, Income, Growth & Speculation.
The table below define each investment objective.
|1||Capital Preservation||a conservative investment strategy characterized by a desire to a avoid risk of loss|
|2||Income||strategy focused on current income rather than capital preservation|
|3||Growth||investing in securities with strong earnings and/or revenue growth or potential|
|4||Speculation||taking a larger risk, usually by frequent trading, with hope of higher than average gains|
These investment objectives relate to risk levels. The risks are going higher from 1 to 4 and also the same with the investment return. You want to take a look at “Investments, Potential Return vs Risk Level” page for potential returns vs risks for different type of funds.
You may also look at investment objectives for funds managed by PNB under the “fund type” section. Most of PNB’s fund adopt “growth” investment strategy. On the other hand, EPF adopt capital preservation strategy & that’s why their yearly dividend always lower than funds managed by PNB.
What is your investment objective?