Collective investment under professional management
Mutual funds are a form of collective investment. In particular, they are a form of Undertaking for the Collective Investment of Transferable Securities (UCITS).
They gather capital from many investors with the aim of creating a single investment portfolio. That is a group of assets which can consist of transferable securities, money market instruments and cash. These groups of assets are known as the mutual fund assets. The management of the mutual fund assets is carried out by professional managers, in accordance with the strategy of every mutual fund.
Each investor participates in the mutual fund by buying shares. All shares have the same value, but their price fluctuates depending on markets and investments performance. Once a day, at market close, the company managing the mutual fund publishes the share prices.
Different investment categories
There are different mutual fund categories covering different investment needs:
- Money market – Assets are invested mainly in deposits and money market instruments.
- Fixed income – Assets are invested mainly in corporate and government bonds.
- Balanced – Assets are invested mainly in shares and bonds.
- Equity – Assets are invested mainly in shares.
- Structured – Assets are invested in any financial instrument.