What is an investment fund?
It is the union of investors who acquire, proportionally and jointly, a technically diversified securities portfolio to meet their investment objectives with the best return and the lowest risk possible.
An Investment Fund is a portfolio of public securities (listed in the stock exchange). It is created with the equity contribution of a number of individual investors, allocating these funds to securities investment in order to meet their investment needs and goals. Whoever enters into an Investment Fund acquires one or more participations in it, which are distributed proportionally to said contributions. This aim of this instrument is for small investors to participate in the benefits derived from large-scale investments (profitability and risk spreading). In our country these funds can only be managed by an Investment Fund Managing Company, and they are subject to a series of diversification rules to reduce risk. Both profits and costs are distributed pro rata to the contribution made by each investor.
The benefits of investing in Investment Funds are summarized as follows:
- Diversification: The funds are invested in a large number and variety of securities depending on the Fund’s objectives. This helps reduce the risk of loss caused by an issuer’s problems.
- Professional Management: An experienced manager makes sure that investments are kept aligned with the Fund’s objectives. Managers perform extensive economic and financial analysis in both domestic and international markets, allowing them to develop portfolio management strategies to maximize the Fund’s return on investment.
- Convenience: With investment funds, you can buy and sell shares, change the distribution of your portfolio invested in funds, and obtain information about them.
- Infrastructure: Investment funds are supported by an infrastructure designed to provide security to the system. The General Superintendence of Securities participates in it as supervising body, as well as the National Stock Exchange, where the securities are acquired.
