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Format Forex Trading: Learn the Basics of Foreign Currency Investing

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Hands holding british pound coin and small money pouch
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The currency markets are some of the most dynamic and high-volume in the world. More than $5 trillion trades hands every day, and currency markets are open 24 hours a day, five days a week, starting Sunday afternoon and running through Friday afternoon.

Here’s what you should know about trading forex, how to invest in the currency markets and whether it’s right for you.

What is forex trading?

Forex, short for foreign exchange, is the trading of currencies, and it takes place in the over-the-counter market or in negotiated transactions between counterparties, such as central banks. In the over-the-counter market, no exchange is involved, and a buyer and seller agree to a purchase price. Currency also can be traded through regulated futures and options markets.

In forex, traders use one currency to buy another, agreeing to an exchange rate for the currency pair. Like any other traders, forex traders are looking to sell the base currency later at a profit, exchanging it back to the counter currency or into another currency that looks attractively priced.

Forex brokers typically allow traders to highly leverage their equity, and it’s not unusual to see leverage of 50 times up to even 400 times the account’s equity. For example, at 100:1 leverage, a trader can buy $100,000 of currency with just $1,000 in equity. So a 1% upswing in the price doubles the trader’s equity. Of course, a 1% downswing wipes out the trader’s equity. However, many brokers limit leverage to 50:1, allowing customers to buy up to 50 times their equity.

In the United States, the currency market is regulated by the Commodity Futures Trading Commission (CFTC), an independent government agency, and the National Futures Association (NFA), a self-regulating industry group. But they regulate the futures and derivatives markets, not the spot market, where much of the trading in forex takes place. The spot market remains unregulated.

Foreign exchange markets explained

Currency trades are always grouped into pairs. For example, a typical trade might be EUR/USD, which is the pair for the euro and U.S. dollar. In this example, the euro is called the base currency, while the dollar is the counter currency. Currency quotes go out to four decimal places, and the first currency is priced in terms of the second currency. For example, the quote for EUR/USD might be 1.1503. This quote means that it costs $1.1503 to purchase one euro.

The standard unit in a forex quote is a pip, an acronym for percentage in point. Because forex brokers quote currencies to four decimal places, it’s convenient to have a term for this fourth digit, and that’s the pip. This is true except for transactions involving Japanese yen, where it’s the second digit past the decimal.

Currency trades are typically placed in lots that are sized as follows:

  • A micro lot: a trade for 1,000 units of the base currency
  • A mini lot: a trade for 10,000 units of the base currency
  • A standard lot: a trade for 100,000 units of the base currency

Brokers will specify the minimum lot size that they will allow you to trade. The minimum often is a micro lot, though some brokers have no minimum size.

The most common way to trade forex is to buy the base currency with counter currency. But more advanced traders often use derivatives such as futures and options to gain exposure:

  • Options give you the right, but not the obligation, to purchase a currency at a specified price by a certain date in the future. You can sell the option before it expires.
  • A futures contract obligates the buyer to purchase the currency if the contract is held to expiration, but it can be sold up until that point to avoid that obligation.

What are some major currency pairs?

There are seven major currency pairs, and the U.S. dollar is on one side of each one. These seven pairs comprise about 85% of all trading volume. In fact, the dollar participates in about nine of every 10 trades that takes place. The major pairs include:

  • EUR/USD: the euro against the dollar
  • USD/JPY: the dollar against the Japanese yen
  • USD/CHF: the dollar against the Swiss franc
  • USD/CAD: the dollar against the Canadian dollar
  • GBP/USD: the British pound against the dollar
  • AUD/USD: the Australian dollar against the dollar
  • NZD/USD: the New Zealand dollar against the dollar

Besides major currency pairs, there are also minor pairs and the exotics — currencies from emerging markets — both of which have a much lower volume of trading.

To measure the strength of the dollar, traders look at the U.S. Dollar Index, a weighted basket of currencies. It’s a quick gauge of the dollar against the currencies of some major trade partners, primarily the E.U., the U.K., Japan and Canada. Sweden and Switzerland are also part of the the basket. When the index rises, the dollar is stronger, meaning it buys more foreign currency.

How to trade forex

The big brokers that dominate stock and bond trading are not always present in the forex markets — though a couple are — but more specialized brokers fill the gap. Whether you go with a traditional or specialized broker, it’s easy to set up an account and start trading quickly, and the process is similar to establishing a stock brokerage account.

If you’re looking for a forex broker, you’ll want to consider the following characteristics:

  • Leverage: How much margin will the broker allow you?
  • Commissions and fees: How does the broker get paid — through a markup on the forex spread or via a straight fee?
  • Minimums: What’s the minimum account size, and what’s the minimum trade size?
  • Currency pairs: How many pairs does the broker offer?
  • Spreads: How wide are the broker’s spreads? The narrower, the better.

In particular, you should pay attention to a broker’s spreads and how they may affect your trading costs. Wider bid-ask spreads can increase your costs, and many brokers will factor your trading fees via a larger spread instead of charging a fixed fee as in stock trading.

For example, let’s say you want to buy 10,000 euros using the EUR/USD currency pair and you pull up a quote on your broker’s site. The bid for euros is 1.1797, while the ask is 1.1799. Sometimes this quote is abbreviated as 1.1797/99, with only the latter two digits quoted. To buy the base currency (euros here), it will cost you 1.1799 units of the counter currency (dollars here).

In this case, since you’re buying 10,000 units, you simply can move the decimal four places to the right, and the total transaction costs $11,799.

Sometimes brokers even quote spreads lower than a pip, breaking down the spreads into one-tenth of a pip. That’s even better for traders whose trading fee is a spread markup since it potentially narrows their costs further.

There are other ways to play forex without going into the forex markets directly. There are specialized exchange-traded funds (ETFs) that allow you to gain exposure to the major currencies and some of the minor ones. Mutual funds also offer currency exposure.

But investors shouldn’t forget that they may already have currency exposure, albeit indirectly, through their stock investments. Major multinational companies derive a huge portion of their revenues from outside the U.S., so their profits usually are already exposed to forex and can move higher when the dollar weakens and vice versa.

What are the risks?

Like any kind of trading, forex comes with its own specific risks. Here are some of the major risks for forex traders and what each means:

  • Leverage risk: Just like in other kinds of trading, leverage in forex can magnify the movement of a currency. That means gains can become increased, but so can losses. With leverage of 100:1, a 1% swing in the currency can double your profit — or your loss. Because of the common use of leverage in forex, it’s important to manage your position size and risk so you can live to trade another day.
  • Political risk: Currencies move for many reasons, but one of the most important is the actions that governments take. A move that is perceived as negative for growth can cause a currency’s value to plummet, as businesses and consumers need the currency less. The U.K.’s 2016 decision to explore leaving the European Union — also known as Brexit — was perceived as highly negative, and the value of sterling dropped in subsequent months. Markets are constantly looking for unstable situations and will discount currencies accordingly.
  • Interest rate risk: All else equal, higher interest rates generally cause a currency to increase in value and vice versa. So when a country’s central bank changes interest rates — especially unexpectedly — or an economy heats up, it can affect how the currency trades. Economies that are growing faster will tend to have higher interest rates, and traders are watching for the relative change in rates in the target countries, not just the absolute level of interest rates.
  • Devaluation risk: A country’s central bank can decide overnight if it wants to devalue its currency, making it worth less vis-a-vis other currencies. A country might devalue its currency slowly over time or in one swoop, and it might do so in order to increase its exports or to reduce the real cost of interest payments on its debt.
  • Exchange rate risk: The forex market can move for fundamental reasons (such as a country devaluing its currency) or for technical reasons (not enough buyers or sellers in the market at a given time). Whatever the cause, traders have to bear the risk that exchange rates will fluctuate, even if the cause is not always clear.

Is forex trading right for you?

Trading forex is not for everyone. With 24-hour markets and the presence of massive players in the market — who can shift trading in the market at their command — it can be tough to be a forex trader.

Also out in the forex market are the following players, each with its own agenda:

  • Central banks: Central banks, such as the Federal Reserve in the United States, can affect the forex markets both directly and indirectly. Their goal is to create economic growth and price stability in their country. Indirectly, central banks set short-term interest rates, which can have follow-on effects in exchange rates. Directly, central banks also can use their domestic currency to buy and sell foreign currencies.
  • Governments: Governments often seek to manage how their currency trades and can intervene directly in the market by buying or selling currencies, perhaps intending to keep the currency strong or weak. They also can devalue their currency.
  • Banks: Banks are among the largest traders in forex markets. They may trade forex among each other, trade to make a profit for their own account or facilitate transactions on behalf of their corporate customers.
  • Professional speculators and traders: These players may include hedge funds and other investment managers, all of whom are trading to make a profit. These traders may take a position in a currency to hedge an investment’s exposure to a specific currency.
  • Companies: Huge multinational companies use forex markets to offset exposure to specific currencies. For example, if a company builds products in one country and sells them to another or many others, then it’s exposed to currency risks. The company might want to offset some of this exposure, especially if there are expectations that currencies will move and affect the company’s profitability.
  • Individuals: Individuals are a relatively small portion of the forex markets, and they’re trading to make a profit for their own account.

Against this backdrop and multitrillion-dollar daily volume, individual traders should carefully calculate whether they want to trade forex. Competitors are huge and can move the market — and, importantly, have motives other than making money. So they take actions that can be completely antithetical to profit, especially yours. These players also are well-informed and know the macroeconomic landscape or at least have access to well-placed advisors who do.

So these elements all can make it difficult for individuals to succeed in the forex market. Traders need to follow and understand the macroeconomic news and reports, and with the markets trading 24 hours a day, new developments can happen at almost any time. Of course, these skills are on top of having the trading expertise to make a go of it.

Bottom line

Some traders can do quite well at trading forex, but currency is not a buy-and-hold kind of asset for long-term investment. Rather, it’s a trader’s game, with active moves in and out of the market, and you really have to stay committed to the practice.

That’s why many individual investors leave forex to the professionals and stick to tried-and-true investing in the stock market. (Here’s how to get started investing in stocks, which have a solid track record.)

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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What Are Equities and Should I Invest in Them?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Equities are shares of ownership in a company. Equity is just another way to describe stock — you’ll hear people use the terms “equity markets” and “stock markets” interchangeably. Investing in equities can be one of the best ways to build your long-term savings. This article covers the basics of what are equities, how do they work and what else you should know about investing in this market.

Equities are how you invest in the stock market

The broad equities definition is the value of a property or a business to the owners after subtracting debts. When you buy a house and begin making mortgage payments, you build home equity, which is the value of your property that you own outright.

Publicly traded companies, like Nike and Tesla, sell shares of their equity to investors to raise money. When you buy a company’s equity — aka its stock — you become a partial owner of the company. This comes with several benefits, including dividends.

Equities pay dividends

As an equity shareholder in a company, you are entitled to a share of its profits based on how much of the company’s stock you own. Companies from time to time will send their shareholders a cash payment called a dividend. The frequency of it depends on the company’s strategy.

Newer growing companies like Uber typically do not pay much in dividends because they reinvest their cash in operations to keep growing. On the other hand, established companies like Coca-Cola focus on paying more dividends to shareholders. So how do you start buying equities as an investor?

The equity market

Investors buy and sell equities from each other through the equity market. When you watch financial news and hear people talking about stock markets, this is what they mean. Some of the larger equity markets in the United States include the New York Stock Exchange and the Nasdaq.

If investors believe a company is doing well and will earn higher profits in the future, the price of its equities will go up. On the other hand, when a company runs into financial trouble, the price of its equities will fall. To access the equity markets, you sign up for a broker who will process your buy and sell trades. We list some of the best online brokers on our site you can use.

Common equity vs. preferred equity

A company can sell two types of equity to investors: common and preferred. With common equity, you earn money when the stock price goes up and when the company issues dividends. You also get the right to vote on certain company matters, like picking the board of directors.

Preferred equity has a few differences. First, preferred stock typically pays a fixed dividend rate, so you get money each year. On common stock, the company can choose when to pay dividends and it might not be every year.

Another difference is if the company ends up going bankrupt, they legally have to pay out preferred equity shareholders first — before they distribute whatever’s left of their remaining money to common shareholders. The downside of preferred equity is that it does not have voting rights. It’s also rarer. While you may be able to buy preferred stock for some companies, most shares on equity markets are common equity.

Why should you invest in equities?

Equities can be one of the most effective ways to build wealth and save for retirement. Over the past few decades, they have posted one of the highest average annual returns, better than other investments like bonds or gold.

By regularly saving money and investing in equities, your savings will benefit from compounding, which is simply where your money makes money. A dollar you put aside now could double, triple and possibly become more valuable in the future thanks to your investment gains.

On the other hand, if you just kept your savings in cash or a bank account with no interest, they won’t grow. This actually decreases your future buying power because of inflation, as prices go up over time. By growing your money with equities, you put yourself in a stronger position in the future while also generating income for today with dividends.

Finally, you can receive tax benefits by investing in equities using a retirement plan, like a 401(k) or a traditional IRA. You can deduct the amount you contribute to these accounts. You save on taxes today while putting aside money for the future. These accounts also delay taxes on your gains, so you don’t owe tax until you take money out.

What is an equity fund?

As a beginner investor, it can feel intimidating figuring out which equities to buy. One way to make things easier is by buying into an equity fund, which is a mutual fund that invests in stocks. Equity funds are mutual funds that combine the money from many small investors to build a large portfolio of different equities. The portfolio is then managed by a professional to meet the fund goals. Some common types of equity funds include:

  • Index fund: Index funds look to mimic the performance of an equity market, like the S&P 500. Rather than trying to guess the top performers, they buy shares of all the companies listed to keep costs low and track the average market return.
  • Active equity fund: In an active equity fund, the manager tries to find and buy the best equity shares in a market to hopefully earn a higher return. Fees can be higher on these funds though versus index funds.
  • Growth equity fund: These funds invest in companies focused on growth, meaning they aren’t paying as much in dividends with the long-term goal to grow their stock price by more.
  • Dividend equity fund: In comparison, dividend equity funds focus more on companies that generate income. Their share price may not grow as much long-term, but they generate more consistent dividend payments.
  • Sector-focused equity fund: Equity funds can also target companies in a specific part of the economy, like energy companies or health care companies.

How does shareholders’ equity work?

Shareholders’ equity shows how much value would be left for a company’s shareholders if it used all its assets (everything it owns) to pay off everything it owes (debts/liabilities). If the company had to shut down today, they would distribute this remaining money to their shareholders.

When a company has high shareholders’ equity, it means that it has more than enough assets to cover its debts. This could be a sign that the company is profitable, shown by a high level of retained earnings on the balance sheet. On the other hand, it could also mean that the company has raised a lot of money from investors. However, if a company has negative shareholders’ equity, it is running into financial trouble because it doesn’t have enough assets to pay off its debts.

How to calculate shareholder equity

Publicly traded companies release their financial statements so investors can check their performance before buying. They list their total shareholders’ equity on the balance sheet so you can look it up there.

You can also do the calculation yourself by adding up all the listed assets, then subtracting all the company liabilities on the balance sheet. If a company has $200 million in assets and $150 million in liabilities, its shareholder equity is $50 million.

You might get equity from your employer

Besides buying shares on the markets, you could also receive equity from your employer. Sometimes they just give shares directly through an equity grant. You could also receive equity stock options, where you are guaranteed to buy shares of a company’s equity at a set price.

If the market price goes higher than that, your options make money. For example, if your employer gives you the option to buy shares at $50, then if the market price goes to $80, you could cash in your option for a $30 per share profit.

When employers offer equity in a compensation package, they usually do so to reward loyal employees. You may need to work a minimum number of years to receive all your equity grants — for example, an employer may offer 1,000 shares, but you only get 20% for every year worked, so you’d need to stay on for five years to earn it all.

If you have any more questions about what are equities, which ones you should pick or your company’s compensation package, consider speaking with a financial advisor. They can help you plan your investments and figure out what role equities should play in reaching your long-term goals.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Review of Voya Investment Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Voya Investment Management is a New York-based registered investment advisor that manages investments for institutions and individual clients. With 206 investment advisors, Voya Investment Management covers a wide range of investment strategies, including equity, fixed income, real estate and hard currency.

All information included in this review is accurate as of March 18, 2020. For more information, please consult the Voya Investment Management website.

Assets under management: $108,248,624,160
Minimum investment: $1,000, no minimum on some investment types
Fee structure: Assets under management
Headquarters location: 230 Park AveNew York, NY 10169
https://investments.voya.com/
212-309-8200

Overview of Voya Investment Management

Voya Investment Management got its start in 1972 when it was known as Aetna Capital Management. For many years the firm was a subsidiary of Amsterdam-based ING Holdings. But when ING began divesting its U.S. retirement, investment and insurance business in 2013, the firm rebranded to Voya, an abstract name meant to evoke the image of a “voyage.”

Today, Voya Investment Management Co. LLC is a registered investment advisor and is a wholly-owned subsidiary of Voya Holdings, which is in turn a wholly-owned subsidiary of Voya Financial Inc. (VOYA), a publicly traded company.

What types of clients does Voya Investment Management serve?

Voya Investment Management largely caters to institutional clients in its role as an advisor and sub-advisor. The firm manages the investments of other investment companies. In addition, Voya provides investment management directly to state and municipal governments, insurance companies, corporations, pensions, charitable organizations and banks and thrift institutions. Only about 2% of the amount of assets Voya manages is on behalf of individual investors.

Voya primarily charges a percentage of assets under management, though the firm also charges performance-based fees in some instances.

For institutional clients, Voya’s minimum ranges from $25 million to $100 million. Investors in R share classes, available through qualified retirement accounts, have no investment minimum. When it comes to mutual funds for individual investors, Voya typically has a $1,000 minimum.

Services offered by Voya Investment Management

For individual investors, Voya has a lineup of over 40 mutual funds covering such diverse asset classes as equities, infrastructure, real estate, hard currency and bonds. In addition, the company maintains a roster of target-date funds whose end dates range from 2020 to 2060 in five-year increments.

Alongside traditional mutual funds, many of these strategies also come in 40 variable portfolios that are available exclusively within variable annuity contracts.

Voya also provides portfolio management services to investment companies, small businesses, pooled investment vehicles, large businesses, selection of other advisors including private mutual fund managers and publications and newsletters.

For individual investors, Voya provides the following services:

  • Portfolio management
  • Selection of portfolio managers
  • Wrap programs
  • Publications of newsletters

How Voya Investment Management invests your money

Voya runs a number of index funds and strategies. For actively-managed strategies, Voya seeks to uncover value before the rest of the market. Voya uses the insights of its analysts for fundamental research into these hidden opportunities.

In addition, Voya has a number of equal-weighted funds. Unlike market-weighted portfolios, the strategy most index funds follow, equal-weighted funds allocate the same amount of assets to each name in the portfolio. The strategy is intended to minimize concentration in the market’s largest companies. Voya’s Corporate Leaders 100 and Global Perspective are two funds that employ this strategy.

In fixed income, Voya applies a macro view alongside bottom up security selection. In addition, Voya applies environmental, social and governance factors in its security selection when the managers believe it’s appropriate.

Portfolio/Fund NameInvestment Strategy
Voya CBRE Global InfrastructureInfrastructure
Voya Corporate Leaders 100Large Blend
Voya Diversified Emerging Markets DebtEmerging Markets Bond
Voya Emerging Markets Hard Currency DebtEmerging Markets Bond
Voya Floating RateBank Loan
Voya GNMA IncomeIntermediate Government
Voya Global BondWorld Bond
Voya Global Corporate LeadersWorld Large Stock
Voya Global Diversified PaymentWorld Allocation
Voya Global Equity DividendWorld Large Stock
Voya Global EquityWorld Large Stock
Voya Global Multi-AssetWorld Allocation
Voya Global Perspectives FundWorld Allocation
Voya Global Real EstateGlobal Real Estate
Voya High Yield BondHigh Yield Bond
Voya Intermediate BondIntermediate Core-Plus Bond
Voya International High Dividend Low VolatilityForeign Large Value
Voya Investment Grade CreditCorporate Bond
Voya Large-Cap GrowthLarge Growth
Voya Large Cap ValueLarge Value
Voya MidCap OpportunitiesMid-Cap Growth
Voya Mid Cap Research Enhanced IndexMid-Cap Blend
Voya Multi-Manager Emerging Markets EquityDiversified Emerging Markets
Voya Multi-Manager International Small CapForeign Small/Mid Blend
Voya Real EstateReal Estate
Voya RussiaMiscellaneous Region
Voya SMID Cap GrowthMid-Cap Growth
Voya Securitized CreditMultisector Bond
Voya Short Term BondShort-Term Bond
Voya SmallCap OpportunitiesSmall Growth
Voya Small CompanySmall Blend
Voya Strategic Income OpportunitiesNontraditional Bond
Voya Target In-RetirementTarget-Date Retirement
Voya Target Retirement 2020Target-Date 2020
Voya Target Retirement 2025Target-Date 2025
Voya Target Retirement 2030Target-Date 2030
Voya Target Retirement 2035Target-Date 2035
Voya Target Retirement 2040Target-Date 2040
Voya Target Retirement 2045Target-Date 2045
Voya Target Retirement 2050Target-Date 2050
Voya Target Retirement 2055Target-Date 2060
Voya U.S. High Dividend Low VolatilityLarge Value

Fees Voya Investment Management charges for its services

Typically, Voya Investment Management charges a percentage of AUM to manage clients’ money, though sometimes Voya has other billing arrangements in place.

For individual investors in Voya’s mutual funds, fees range from around 0.50% for the target date funds to 2.00% for the Voya Russia Fund. In addition, the A shares of the firm’s funds levy a 5.75% maximum upfront commission. However, investors can have the front-end load amount reduced with higher deposit amounts.

In addition, Voya also provides wrap program services to broker-dealers. If Voya is selected to be the investment, clients will pay one fee to their broker-dealer for Voya’s service and Voya bills the broker-dealer. In those cases, Voya charges less to the broker-dealer for its services than it would normally charge. However, clients may pay more than going to Voya directly.

Equity Funds Class A Shares Commissions
Total balanceFee
Up to $49,9995.75%
$50,000-99,9994.50%
$1 million-249,9993.50%
$250,000-$499,9992.50%
$500,000-999,9992.00%
Over $1 million0.25%-0.35% 12b-1 fees and 0.25% tail fee for 13 months
Fixed Income Funds Class A Shares Commissions
Total balanceFee
Up to $100,0002.50%
$100,000-$499,9992.00%
Over $500,000N/A

Voya Investment Management’s highlights

  • Covers all bases: Voya’s investment lineup is exhaustive. In addition to typical asset classes, such as equities and fixed income, Voya also has offerings in alternative investments like real estate, global real estate, hard currency and Russian companies. Sophisticated investors who want exposure to these niche areas will be able to complete their portfolios, however, they might be assuming additional risk.
  • High customization: In separately managed accounts, Voya will tailor investments to the individual needs of its clients, such as excluding certain industries and securities if clients have an objection or emphasizing environmental, social and governance factors for those who prioritize that in their investments.
  • Best place to work: Over the years, Voya Investment Management has landed on several lists as a best place to work. For example, in 2019, the firm made it to Pension & Investment Magazine’s “Best Places to Work in Money Management” for the fifth consecutive year. In 2018, the firm was recognized as a “Best Place to Work for Disability Inclusion” by the American Association of People with Disability and the U.S. Business Leadership Network.
  • Low fees: While the gross expense ratio of Voya’s mutual funds seem high, the firm has contractually agreed to waive certain fees. As a result, many of Voya’s mutual fund fees are classified as either “below average” or “low” by Morningstar, the fund research company. On the other hand, A shares of the funds carry a 5.75% upfront commission.

Voya Investment Management’s downsides

  • Few offerings for individual investors: Voya Investment Management’s services are limited to investment management and don’t include financial planning. Further, its focus on institutional investors and high net worth clients mean that individuals who want to invest in Voya funds will first need to find a financial advisor (and pay a commission) to help them invest.
  • Collects performance fees: Voya’s use of performance fees could potentially push portfolio managers to take on additional risk in an effort to boost performance.
  • Potential conflicts of interest: Some Voya Investment Management employees are also registered representatives of Voya Investment Distributors and can receive a commission for the sale of investments managed by Voya. This creates an inherent conflict of interest since these representatives receive financial remuneration for their recommendations.
  • Could be on the auction block: Voya Financial, the parent company of Voya Investment Management, held talks to sell itself in late 2019 with several big insurance companies. Though the talks didn’t result in a sale, there’s speculation that the firm could be on the market with private equity companies in the mix of potential buyers. A sale could result in some disruption for investors as the company transitions from one owner to another.

Voya Investment Management disciplinary disclosures

In 2013, two directors of ING Pomona Private Equity, a closed-end fund of funds and a Voya affiliate, organized in Luxembourg, ran afoul of Luxembourg securities regulation when they failed to file the annual financial statement in a timely manner with the Luxembourg Commission de Surveillance du Sector Financier. The fund received a fine of 2,000 euros. The directors argued that they are not engaged in day-to-day fund activities such as filing annual statements. What’s more, since the fund is a fund-of-funds, it must first receive financial statements from the underlying portfolios in order to file its own annual statement. Besides the monetary fine, there were no other actions taken.

Voya Investment Management onboarding process

To access one of the Voya funds or strategies you’ll need to go through an intermediary, whether that’s a financial advisor or a retirement plan at work. You can get a prospectus for a Voya Investment Management fund by calling 800-992-0180.

Is Voya Investment Management right for you?

Voya has a wide range of investment options that can be the backbone of most people’s investment portfolios. It’s suite of below average and low-fee funds (after sales charges) speak favorably of the line.

However, because Voya’s primary business is institutional, individual investors can only access Voya’s investment strategies through an intermediary such as a financial advisor or in a workplace retirement plan. Advisors who sell Voya funds collect an upfront commission, giving them a financial incentive to do so. Investors need to weigh whether the added cost, plus the potential conflict of interest, are worth it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.