Types of funds

Investment funds are business entities with the character of a legal person. Permanently associating people and material resources in order to carry out the task of multiplying the invested capital. Traded financial assets are the sum of contributions made by fund participants who purchase participation units of a given fund through cash outlays. Alternatively, in the case of closed-end funds, they receive securities issued by the fund, referred to as investment certificates. We explain this topic in detail at Webinar Universe. One of the most important decisions facing a potential investor is the choice of an institution that offers the opportunity to invest in funds. As well as selecting an investment fund with an investment portfolio best suited to the investor's needs and capabilities, and the method of participation. A good method to select a broker is the opinions of investors who have already used their services. There are many threads on thematic forums related to which Forex broker is most often recommended and why. Another safe method to indicate which broker is best is to analyze information from professional sites dedicated to researching and creating classification and hierarchy of brokers. The basic criterion for the distribution of investment funds is the conditions of participation. Therefore, the following can be distinguished:

• Open-end investment funds (FIO),
• Specialist Open-End Funds (SFIO).
• And closed-end funds (FIZ)

FIO, i.e. open-end investment funds

Open-end funds are characterized by high volatility of investors, mainly due to the fact that deposits and withdrawals of capital can be made at any time. In addition, open-end funds may be attended by natural persons, legal persons and organizational units without legal personality.

The most important features of an open-end mutual fund include:

• No restrictions on entry and exit of the investment.
• Ability to invest in a fund with segregated sub-funds.
• Option to change or convert units Participation. Because the investor has the right to demand the purchase of participation units of the selected fund from him and the purchase of participation units of another fund or sub-fund with the funds obtained.
• Ability to invest in different time horizons.

When deciding to participate in open-end investment funds, the investor has a choice of investing, among others:

• Money market instruments that constitute a public offering.
• Deposits in domestic banks with a maturity of more than one year.
• Shares of listed companies.

Open-end investment funds have an unlimited number of participation units and, most importantly, they are obliged to buy them out at the participant's request, which we talk about during online trainings.

FIZ, i.e. closed-end investment funds

FIZs are a group of funds that are characterized by limited access of investors to enter the fund, as well as restrictions on making deposits and withdrawals of funds. These difficulties are primarily related to predetermined issuance dates, which significantly limits the possibility of purchasing securities, which include investment certificates.

FIZ may invest capital in:

• Securities.
• Shares in a limited liability company
• Bank deposits.
• Currency.
• Shares in other investment funds.
• Property rights in real estate or seagoing vessels.

In addition, in addition to securitisation funds, they can invest in receivables with the exception of receivables owed to individuals. Another factor characterizing FIZs is their division into closed-end public and non-public funds. In the case of the latter, the group of investors was limited to 149 entities. An additional condition for participation in the FIZ is the minimum investment value, which oscillates around EUR 40,000. Investing in FIZ does not require specialist knowledge related to the functioning of financial markets, as the entrusted funds are managed by qualified closed-end funds.

On the other hand, one of the biggest advantages of FIZ is often lower service costs than in open-end funds.

SFIO, i.e. specialist open-end investment funds

SFIO is a type of investment funds that are a hybrid of FIO and FIZ funds. They operate on the basis of an open-ended fund, with the difference that the circle of participants may be limited by the provisions of the statute. The SFIO Articles of Association may also impose conditions regarding the request for the repurchase of participation units, as well as the deadline within which this may take place. We also thoroughly explain their topic on Webinar Universe.

SFIOs may invest assets in:

• Units of other open-end funds Investment.
• Certificates of participation transmitted by foreign funds.
• Shares of collective investment institutions that have their registered office outside the country and operate under certain rules.
• The most significant advantages of SFIO include, among others:
• Responsibility of the fund's asset management professionals for management methods.
• A high degree of investment flexibility.

To sum up, the overarching feature of SFIO is the requirement to agree to certain directives, which should be read in detail. There are situations in which it is not possible to freely withdraw the funds invested in SFIO and terminate the investment.

The division of investment funds requires a deep understanding of the specifics of their functioning. The choice should be dictated by an understanding of the financial goals, the amount of acceptable risk and the time horizon of the investment.

It is also extremely important to establish an appropriate investment plan when selecting funds. This is because it helps to establish an investment profile that determines individual preferences, the degree of risk acceptability and the percentage of savings allocated for systematic investment in a specific period of time.

In addition to the choice of the fund, it is also extremely important to select the institution with the participation of which the processes of capital multiplication are to be carried out. That is why it is worth considering partners related to investments on a daily basis, partners to which Forex brokers belong.