Do you want to know more about investment funds? Please find below an overview of the subject in a few key points. And if you have any questions, please do not hesitate to contact us!
What is an investment fund?
Investment funds, also known as collective investment schemes, are capital deposits made by investors to be managed jointly on their behalf. The principle is simple: several investors pool their money in this way. These amounts are then invested in various securities, such as shares, bonds, real estate etc. The invested capital is divided into units, which are subscribed by the investors. Investors' needs are met on equal terms. Investment funds are based on a collective investment agreement (fund agreement) that defines the rights and obligations of the investors, the fund management company and the custodian bank.
The various assets are managed by a fund manager. The manager analyses the investment universe and takes the necessary decisions in accordance with the objectives he has defined. These strategies may include, for example, the pursuit of long-term growth, steady high income, capital preservation or a combination of these objectives.
Depending on these objectives, investors' capital is invested in various asset classes, such as equities, bonds or real estate funds.
- Equity funds invest in equity instruments of several companies from different geographical areas, sectors and themes. A broad diversification of equities reduces the risk compared to investing in a single investment. These funds are intended for investors who wish to realise significant capital gains over the long term.
- Bond funds invest in debt securities. Bond buyers provide credit to companies or governments. These funds are intended for investors seeking security and/or a regular return on their investments.
- Real estate funds invest in residential, commercial and industrial buildings and building land. These funds are suitable for investors with long-term return objectives. As a rule, they offer constant returns and higher yields than bonds.
- Asset allocation funds consist of a variable proportion of bonds, equities and cash. It is an effective investment solution for risk diversification. They offer both yield and value-added potential, halfway between bond and equity funds.