An investment fund is a legal entity whose sole object of activity is to collect and manage the money of its participants. Investors transfer funds of their choice to investment funds with a view to investing them in various types of securities.
This is worth knowing at the beginning
The money paid in by investors is converted into participation titles (participation units or investment certificates). Thanks to this, the fund’s assets are created, which are a combination of funds of all its participants. The assets of clients invested in the fund are completely independent of the assets of the investment fund company (TFI).
Investment funds are created and managed by specialized institutions of the Investment Fund Company (TFI). The activities of investment funds and investment funds are regulated by law.
The basic task of an investment fund is to multiply the money entrusted to it by the participants. On their behalf and in their interest, the funds are managed by specialists (fund managers) who invest them in various financial instruments (shares, bonds, money market instruments, etc.).
An investment fund is a modern and effective method of saving. The combined capital of many investors gives funds more opportunities to multiply money profitably than a single person has and allows them to reduce costs.
An investment fund allows you to invest funds collected from clients in the following types of deposits:
- Actions
- treasury bonds or bonds issued by enterprises,
- money market instruments,
- foreign currencies,
- raw materials (e.g. gold).
What is investing money in mutual funds?
Investment funds are a relatively simple form of investing money in terms of the mechanism of operation. In practice, you do not need to have specialist knowledge of the stock market or financial markets, because qualified and experienced specialists will take care of managing funds on your behalf.
The operation of investment funds is based on building a portfolio consisting of various investments, and thanks to their large scale and well-thought-out diversification, it is possible to achieve better results and greater profits than in the case of an individual investor without specialist knowledge and tools.
An investment fund can be used by both a natural person and a legal person and an entity that does not have legal personality. Joining the fund involves the need to place an order to purchase participation units and a cash payment.