Daniel Vicien, financial advisor, in dialogue with Ámbito provided the technical definition: “A mutual fund is a collective investment instrument, regulated by law, and supervised and audited by the National Securities Commission. They are investment portfolios managed by a Management Company of Common Investment Funds (one of the agents of the capital market law) and whose assets are guarded in a Depositary Company different from the management company (another agent of the capital market)” .
When you join a Common Investment Fund small parts of the fund are being bought, these parts are called quota shares. There are two basic types, according to the law, the open and the closed. “Open funds are those that are subscribed and redeemed during market hours (10 a.m. to 3 p.m.) at the closing price of the value of shares on the day of redemption or subscription. These funds are open because the amount of money in shares is not fixed. it varies with the money invested,” added Vicien.
“Rescue” is said to the exit of the investment. Usually the redemptions are credited in different terms depending on the fund in question: it can be immediately, in 24 hours or in 48 hours. In the case of Closed Mutual Funds, as there is a limited number of shares, a counterparty is needed to subscribe or redeem.
How to choose a Mutual Fund
- Liquidity Funds (Money Market): They are a very conservative investment. Recommended for those who want to invest their money in the short term, with immediate liquidity and free of price fluctuations.
- Bond or Fixed Income Funds: They represent a medium/long-term investment. They are of moderate performance and price fluctuations.
- Mixed Funds: They combine different financial assets, such as bonds, shares and fixed terms. Your risk and return will depend on the behavior of each of them.
- Stock or Variable Income Fund: They represent a long-term investment. They have potentially high yields and are subject to price fluctuations in the stock markets.
What the experts recommend
In the market for retailers, the most demanded are those with CER adjustment, to hedge against inflation, and money markets. “A retail investor should start by investing a portion of what they have and follow the performance. They should start with Money Market and funds with CER adjustment. Another type highly demanded today are funds that only have corporate bondsthat is to say without risk of sovereign debt”, assured the financial adviser.
“Money market funds, these funds are redeemed on the day, they have no market risk and pay a rate of more than 60% per year, they are like a savings bank but with better rates”told Ámbito, Daniel Vicien, and expanded: “This is the fund to start investing and not leave the money in a savings account that doesn’t save.”
As for the Fixed Income FCI are those that have assets such as letters and public and private bonds. Within these, those less than a year old are those with letters. There are also funds that serve to cover the devaluation of the official dollar (linked dollar). On the other hand, there Argentine bond dollar fundsfunds that do not have Argentine assets (the South Americans)and specific funds, such as for insurance companies such as SMEs and Infrastructure.
“You always have to know what you are investing in, that is, look at the composition of the fund,” closed Vicien.
What is the advantage of investing in an FCI
Among the advantages of investing in a Common Investment Fund are that they are insurance, that there is a diversification in the investment and are regulated and controlled by the National Securities Commission. The investor can have his money when he needs it, not having to wait for his investment to expire, in addition to being easily accessible and simple to operate.
It is also important to highlight the disadvantage that FCIs represent and that is that they involve more risk than a fixed term. The percentages of profitability of the funds are estimates, which does not imply that they are actually met to the letter, unlike the fixed terms that the interest is already pre-established.
How to subscribe to an FCI
It is necessary to have a client account that can be managed in a bank or stock broker. It is an account that has no cost and is used by the Fund Management Company to record the investments; there the shares will be credited.
Source: Ambito
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