Shares in Mutual Funds

Mutual funds

The units of mutual funds are among the instruments of collective investment of savings . In practice, some companies with legal status, asset management companies ( SGR ) and investment companies with variable capital ( SICAV ), collect the money from savers or institutional investors who entrust the management of these means to these companies, investing the capital on the most disparate markets: mobile, real estate, financial and monetary, diversifying the investment and reducing the risk with respect to the direct investment in shares of a single company in a single sector.

Fondi comuni di investimento Mutual funds represent a relatively secure form of investment for their savings, as substantially, the management of the invested capital is delegated to professionals, always remaining within the scope of investments appropriate to their financial risk profile.

Moreover, thanks to the so – called accumulation plans (PAC) , or the purchase of investment fund shares on a monthly, quarterly, half-yearly or annual basis, investment funds have become attractive even to the majority of investors who do not possess substantial funds. Based on the profiles and objectives of the various investors and therefore on their risk profile and based on their expectations of return, we can find investment funds of different types:

Equity funds

 Equity funds

Bond funds

 Bond funds

Balanced Funds

 Balanced Funds

(or who invest in shares and bonds)

Real Estate Funds

 Real Estate Funds

(where the capital is invested only in financial instruments, in the latter in real estate, real estate rights and investments in real estate companies)

Liquidity Funds

 Liquidity Funds

(who invest in short-term bonds and liquidity in various currencies)

A further classification of investment funds is the definition of open fund or closed fund .

Closed funds

 

The closed funds have a fixed capital and decided upon its establishment. Investors subscribe to their shareholding at the time the fund is set up and cannot leave it until the fund expires.

Open funds

 Open funds

Open-end funds have variable capital. Therefore, every investor, saver or institutional investor can buy or sell fund units at any time and the value of the fund is calculated daily based on the quotation on the relevant market. In turn, open funds can be divided into two sub-categories:

  • Harmonized funds , ie those that comply with the directives of the European community and applied in Italy. These funds are the funds that all savers can access.
  • Non-harmonized funds , which, not respecting these constraints, are reserved for large investors, have greater investment freedom and a greater risk associated with them. Among these we find speculative funds , funds of funds and above all Hedge Funds (for example, to invest in these instruments a minimum investment of 500 thousand euros is currently required).

The benchmark

 

It is the benchmark that allows to recognize the profile of a financial product or fund and, in this case, it also helps to understand the risk index of a fund. It consists of one or more market indices that configure the performance of the markets in which the fund invests. Mutual funds under Italian law have the obligation to indicate the benchmark on all documentation addressed to the public and to compare it with the performance of the fund.

When you decide to invest in investment shares, you must take into account in addition to the performances of the fund itself, but also and above all the commissions that the fund manager applies to investors.

The commissions can be summarized as follows:

  • The subscription commission , which is paid at the time of the first payment and of any payment in general in the cases of (PAC). There are also funds that do not require entry fees and are called no load funds.
  • The management fee is calculated annually, but is usually paid on a half-yearly, quarterly or monthly basis.
  • The exit fee is paid at the time of disengagement of the capital.
  • Performance fee : it is a sort of bonus that the fund managers decide (always according to the statute of the fund) to achieve certain goals set by pre-established parameters.

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