The investment funds are saving instruments . It's about a heritage that is formed with the contributions of a group of people They invest their capital in search of profitability. What the fund does is to collect the money contributed by all the participants, so that an entity is responsible for its management and administration.
The funds usually diversify the investments , so that it is intended for monetary assets, stocks, bonds and other financial instruments. In this way, the capital of the participants is more protected.
The operation of an investment fund can be understood as follows. The savings of each person goes to the fund, which creates a great common heritage . Given the size of this heritage, savers reach a bargaining power that would be impossible to obtain if they invested each on their own.
Specialists recognize several advantages to investment funds. Usually, they do not require large amounts of money to enter. Moreover, they meet well regulated and their subscriptions are easy to buy and sell. Finally, investment funds are managed professionally, which is an advantage for the saver who does not have great knowledge of finance .
As for the history of the funds, its farthest origin dates back to XVII century , with the administratie kantooren in Holland . Of course, these mechanisms were very different from the current ones. Just in 1957 The first investment fund appears as we know it today.
Types of Investment Funds
There are various types of investment funds, which respond to the regulations in force in the legislature of each country.
He Free Investment Fund (FIL) and the Free Investment Fund (FFIL) are known as the Castilian version of the Hedge Funds and they can be clearly differentiated from the rest of more traditional funds because they grant greater flexibility to customers, especially in relation to debt, periodicity in the calculation of the settlement value and commissions. The latter are also funds in which the assets of other free investment funds are invested.
He Real Estate Investment Fund (FII) is characterized by being prepared to receive investments in different properties, from homes and garages to industrial structures, from which a return is obtained by putting them on rent or reselling them.
There is also a modality of foreign funds known as Variable Capital Investment Company(SICAV), in which investments can be made on shares valued in another national currency. It works similar to traditional investment funds and has a tax similar to theirs.
It is necessary to clarify that when buying an investment fund, a minimum part of a portfolio is being bought, that is to say, participating in a common fund in which it corresponds to said subject. liquidation value, which is proportional to the money invested in it.
Its operation is like that. The managing entity from this fund, he receives the money from the investors and invests it in actions that he considers profitable (respecting of course the wishes of each investor), the total of the investments received will consist of the total value of the equity.
For example, if an individual invests 1,000 euros in a European fund whose assets reach 10,000,000 euros, divided into shares of various companies such as Royal Dutch (10%), Société Générale (8%) and Telefónica (5%), said Investment will be divided into them proportionally to what they own. In this way the investor will have in shares: 100 euros in Royal Dutch, 80 euros in Société Générale and 50 euros in Telefónica.