Types of investment funds
Posted on Nov 20, 2000 08:15:27 AM
Investment funds, in our opinion, one of the most convenient ways to invest. They are used as novice investors and professionals. Given the large number of existing funds, they can choose for every taste and color. 
Stock funds, bond, mixed (and stocks and bonds), investing only in a specific region, country, sector, etc.
Their main advantage, as you know, it is possible for small amounts of money to diversify investments. That is, investing in the fund you indirectly own a significant number of financial instruments (stocks, bonds), rather than one or two, if you decide to buy them directly.
For significant amounts of the preference will be savings on transaction costs. Those who use the approach of top-down “(top down approach) to select investments, and clearly represents what he wants to invest in one or two stock than to buy several dozen and even hundreds of assets.
By way of managing the funds are divided into active and passive. Embeddings passive funds correspond to the structure of the selected index (eg, S & P 500). That is, your income is equal to the yield of the corresponding index, minus the remuneration of the management company and transaction costs. In this category, the most interesting, in my opinion, are the class of so-called Exchange Traded Funds “(exchange traded funds, ETFs). They have a minimum commission and the process of buying on the stock exchange, is no different from buying shares.
Active management, as the name implies, means that managers are trying to get better results than the yield index, with which they compare the results of his administration (benchmark). Traditionally, these were engaged in mutual funds (mutual funds, the Russian equivalent of mutual funds), which had no right to sell short (“short”). Therefore, if the index fell 20%, and their fund by 10%, then it is considered a good result.
At the present time are becoming popular, “Hedge Funds” (hedge funds), which is focused on generating absolute returns. That is always seeking to make a profit, regardless of rising or falling market.
Hedge funds are a specific type of investment funds. Less adjustable (almost always established in any offshore jurisdictions) than conventional funds. Has greater freedom in the choice of instruments for investment. Can “short” and use leveradzh. What is very often used.
A typical compensation structure of hedge funds 1% of the average value of assets under management plus 20% of the profits.
The minimum amount of investments range from $ 100,000 up to $ 50 million, depending on the fund. The most successful is very difficult to invest money. Very often they are “closed”, ie do not accept new money.
In the U.S., to invest in hedge funds, investors must satisfy one of the following conditions:
bond, fund index, hedge, investing, management, stock,- Results for fund index
- Glossary Mutual Funds
- Investments in mutual funds How to become a shareholder
- Results for mutual fund
- Hedge fund