Investment Funds

An investment fund supposes the gathering of a common capital from several investors, that can be physical or legal persons, to be invest on the stock exchange market.

The participants of this fund assure their possession through some representative certificates of their shares in the fund and they obtain their profits in a proportional way according to their participation in it, that is, always that the fund obtains profits.

So then, the participations on an investment fund are the securities that represent the rights of ownership of each investor in the common capital of the fund. These participations must have the same characteristics for all the participants.

The following is the process to enter into an investment fund.

The investor buys a participation that makes him a partner. After that, its management (administration and representation of the investment fund) carried through by special institutions called “Associations for the administration of collective investment institutions,” and its basic functions are:

  • To decide and direct the politics of investment
  • To daily calculate the value of the participation (a result from dividing the global assets by the number of participation).
  • The liquid value of the participation can be defined, more precisely, as the quotient between the net capital and the number of participations, being the net capital and the number of participations, being the net capital the result of the deducting from the total value of the assets the debt records and the regulation established expenses, as are the administrative and deposit commissions.

To obtain a good functioning of the fund

On the other hand, all investment funds must assigned a “Bank of deposit”, which functions are:

  • To assume the supervision and tutorage of every operation realized by the fund
  • To care for the securities in the portfolio of the fund
  • To receive from the participants the sums of their investments
  • To control the liquid assets that legally must possess the fund
  • To supervise and watch the management function of the association that administrates the fund

We must emphasize that the investment funds and institution of collective investments are gaining every day more importance as an alternative for the investors.