Investment fund by definition

An investment fund is a form of collective investment in financial instruments of funds collected from fund participants.

In addition, thanks to their group investment design, they are accessible even to those with small cash surpluses. The minimum amount of payments in some funds oscillates at the level of PLN 50. - 100 PLN. Where do such amounts come from, we write about in our Webinar Universe trainings. You can be guided by the opinions contained on the websites. dealing with the subject of the Forex market or the opinions of people who invest capital with this method and already have developed ideas about individual brokers. It's a good idea to trust experienced investors, delve into their opinions and check what they choose most often.

The participants of the fund are investors who make deposits. On the other hand, the accumulated funds are invested by the fund's management professionals in various financial assets included in the fund's statutes. Depending on the investment portfolio of the selected fund, these may include:

• Actions Polish and foreign.
• Debt securities.
• Bonds and Treasury bills.
• Raw materials market.
• Property.
• Other property rights.

In other words, investment funds can be defined as specialized business entities that collect investors' funds and invest them in specific assets declared in the fund's articles of association. The sole purpose of the funds is to multiply the capital of its participants. Payments made to the fund are exchanged for participation units in the case of open-end investment funds. And for investment certificates in closed-end investment funds. On the other hand, the units or certificates purchased by the fund participants are financial instruments that express the respective share of individual investors in the fund's assets.

An investment portfolio, on the other hand, is a collection of financial and real assets, such as real estate, diversified in a manner adequate to the type of fund.

Investment fund according to the law

The activity of investment funds is regulated, among others:

• EC Delegated Regulation No. 231/2013 of 19.12.2012 supplementing Edict 2011/61/EU of the European Parliament and of the Council referring to exemptions and general clauses on conducting business, depositaries, leverage and insurance.
• Directive 2011/61/EU of the European Parliament and of the Council of 08.06.2011 on alternative investment fund managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) 1060/2009 and (EU) 1095/2010 and
• Commission Delegated Regulation (EU) 694/2014 of 17.12.2013.
• Commission Implementing Regulations (EU) 448/2013 and 447/2013 of 15.05.2013
• I Commission Delegated Regulation (EU) 231/2013 of 19.12.2012.

All the legal acts mentioned on our training platform specify in detail the functioning of investment funds. Thus, they ensure the security of invested funds and regulate all rules for the purchase and sale of participation units or certificates. They specify in detail the possible investment risks. And they supervise the deposits and withdrawals of funds from the funds in question.

Investing in funds

For beginners, investing in funds may seem complicated. However, there are fundamental principles of investing that we talk about in Webinar Universe that provide valuable tips for inexperienced people.

• Emotions are the worst investment advisor, so every investment should be carefully analyzed and taken when the body is will calm you down and be able to make logical decisions.
• The amount of capital allocated for investments should always be specified, with particular emphasis on financial possibilities. And without involving all available resources.
• It is also important to set an investment goal.
• Determination of the time horizon of the investment.
• Estimation of the investment risk that can be taken.
• And ensuring that your investment portfolio is properly diversified.
• The most important mistakes to avoid in the initial phase of using the funds include:
• Lack of a well-defined investment objective.
• Putting too much trust in a fund's historical performance.
• Lack of detailed investment risk assessment.
• Taking the current state of the market in the context of future performance Fund.
• And the lack of proper diversification of the investment portfolio.

Creator & Buyer

According to the European letter of the law, only an investment fund company initiated by a joint-stock company with its registered office in Europe and a valid business license can become the creator of an investment fund. At the same time, one fund management company may initiate more than one fund. Adult natural persons, legal persons, as well as organizational units without legal personality may become purchasers of investment fund units.

Investment funds are unquestionably among the safe financial institutions whose activities are specified in detail by law. The choice of the fund should be carefully analysed, first of all, in terms of acceptable investment risk. Those who are only able to accept a minimal level of risk should turn their attention towards money market funds, cash funds or debt securities funds. Investors who allow for medium investment risk should be interested in hybrid, balanced, stable growth, capital preservation and active allocation funds.

On the other hand, investors who accept high investment risk are recommended aggressive funds, which invest capital to a large extent in shares. Additionally, before choosing a fund, each investor should carefully determine their investment goals and the time frame in which they should be achieved. If you want to fully understand the issue of funds, it is worth taking a look at Webinar Universe.