According to the famous Free Encyclopedia Wikipedia an Investment Fund is a form of financial investment, formed by the union of several investors who come together to make a financial investment, organized in the form of a legal entity […], aiming at a certain objective or expected return, dividing the revenues generated and the necessary expenses […].
Taking this definition as a starting point we easily conclude that there is an objective in the creation of Investment Funds that is intended to be clear and is summed up in the aggregation of several investors to raise funds for specific investments.
With respect to Investments, these can be classified into two large groups:
- Investments Furniture;
- Property investments.
Before starting to develop the article Investment Funds – Furniture and Real Estate, I advise you to consult the previous articles on the subject, namely:
- Guide to Investment Funds – Introduction;
- Investment Funds – Introduction (Part II).
Furniture Investment Funds
The Investment Funds are characterized by the fact that their assets are invested in securities (such as shares, bonds, currency, derivatives, among others …). The most well-known types of Investment Funds are:
They are characterized by short-term and high liquidity investments (eg government bonds, bonds). They are low-risk funds with a return on equity interest rate. This type of funds is the ideal vehicle for investors who value the liquidity of their savings and who are risk averse.
These are funds whose assets are invested primarily in shares, generally more than 60% of the basket consists of shares. This type of fund presents a greater risk than the other categories of funds given the greater volatility of the assets that compose it. Likewise, the possibilities of profitability are also greater and the risk and profitability is directly related to the Country and the Sector where they are inserted.
These funds are comprised of bonds and have a lower risk than equity funds, however, compared to treasury funds the associated risk is higher. There is a breakdown of bond funds to the extent that they consist of fixed rate or floating rate bonds. In terms of potential profitability it is higher than treasury funds but lower than equity funds. They may restate some state savings products, such as Savings Certificates.
As the name implies are funds whose assets are divided into shares and bonds, so the level of risk varies substantially with the relative weight of each of these assets. Thus, if a large part of the assets are shares the risk of the fund is higher and vice versa.
The name indicates this type of funds has its profitability associated with an index, and can be any one according to the investment policy. This type of funds is at risk depending on the index you have adopted.
Real Estate Investment Funds
Real estate investment funds emerged in Portugal in the 1980s with the aim of enabling small savers to have access to real estate investments, which by their very nature require high financial resources. The Real Estate Investment Funds have a private investment scope, in that they choose to acquire real estate for housing or lease. However, the managers of this type of funds have particular preference for rental properties, such as offices, commercial spaces or warehouses.