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What are the investment funds

investment funds

investment funds :

 is an investment tool managed by persons specialized in the financial market.

It contributes to increasing capital by selling shares called units within a group of securities.

Investment funds and capital invest in a package A joint venture known as a portfolio,

which brings together securities,

products and other things that are compatible with the fund and the phenomenon in the prospectus.

Mutual funds are also defined as an investment program that is financed by a group of shareholders

who trade in These funds must be managed in a professional manner.

Another definition of an investment fund is a financial service based on the presence of financial experts

 to invest private funds in individuals within more than one diversified company.

Types of investment funds

Investment funds are divided into a group of species, namely
Income Funds: Income Funds,
also known as income funds, are funds that invest in fixed-income instruments that are regularly distributed.
Examples include bonds that are suitable for the needs of portfolio investors who wish to receive periodic returns with Low risk

Capital Funds: Growth Funds  Funds that invest in equities that are capitalized over a long period of time.
This type of fund is suitable for investors who wish to deal with long-term investments.
Aggressive Funds, funds similar to capital growth funds, but investing in high risk securities to achieve higher returns for investors.
These funds are suitable for investors with high risk ratios
Exchange Traded Funds are a type of investment fund that invests in a range of stocks, characterized by an increase in its stock market index
Money market funds, which are short-term funds, because they use short-term financial instruments such as treasury bills and savings certificates with maturities of up to three months, ie, 90 days. Investors who want to maintain high liquidity rates

How Investment Funds Work

Investment funds rely on their own way of doing business through a set of steps
Fundraising by financial companies from investors, and then invest in bonds and short-term stocks in the financial market.
The use of instruments and securities within investment funds.
Management of investment portfolios by the Board depends on the investment adviser, and represents each private equity fund in the investor.
Grant fund owners the right to buy and sell their own shares either through direct dealings with the fund owner or through investment experts such as financial intermediaries.
Put a financial value for the shares on each working day, which is an obligation for each shareholder in an investment fund

Advantages and disadvantages of investment funds

Investment funds are affected by a set of advantages and disadvantages, and are divided according to the following
The characteristics of the investment funds:
are characteristic of these funds, the most important of which are:
Diversity: In other words, the investment funds provide a basket of diversified securities that contribute to diversifying the contents of the investment portfolio.
The effectiveness of small accounts: Mutual funds provide many types of stocks, which helps investors with small capital to buy shares suitable for the size of their investments.
Professionalism in the management of funds: Investment funds are managed by relying on investment managers who have experience in this field and are dependent on companies specialized in mutual fund management.

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The disadvantages of investment funds: are the characteristics of investment funds, the most important of which are:

There is no instantaneous trading for mutual funds: the investor can not continue trading in these funds at any moment;
because of the close of the trading market at the end of the working day, making it difficult to take advantage of unexpected changes in the financial market.
Subject to tax: The investment funds that distribute their profits once a year are also subject to the value of their tax,
even if the investor did not receive any profits during the year, but he must pay the value of the tax after collecting the value of capital gains.
Participation with the Group: In the sense that if the investor is committed to investment transactions,

this will not cause any concern in the event of fluctuations in the financial market,
but in the case of mutual funds between more than one investor shows the possibility of decline or shortness of an investor,
resulting in negative results Affect the performance of the Fund and all investors and not only one investor.
Costs: In other words, investment funds generally depend on the presence of costs in all cases affecting them,
and these costs often reduce the rate of private returns in the investor;
therefore, the expenditure of investment funds must be limited during the year, or those expected in the next period