Indirect investments, that is, those in which an investor acquires a “collective investment vehicle” such as investment funds, represent a very large industry and with different types of funds that are increasingly sophisticated. So it is that when thinking about how to invest my money, the matter can become very thorny.
Initially, these products were very much in demand by conservative investors, who did not find adequate returns in the deposits. In recent years this has changed a lot, and the preferences of the fondest are very varied. Depending on our risk aversion and investment expectations, there is a wide variety of funds to invest.
WHERE CAN I INVEST MY MONEY?
The main premise, before deciding on what to invest and selecting any financial instrument, is to be clear about our profile as investors, our objectives, and our level of risk.
There is such a large amount of financial products and in turn, all with liquidity, risk, and profitability so unique that sometimes the investor is lost in the maze of markets.
This point is perfectly settled by investment funds, since there are so many types in the market, such as investor profiles.
WHY INVEST IN FUNDS?
The option to invest in funds is very attractive for all investment profiles, for several reasons:
The first of these is undoubtedly the elimination of non-systematic risk (specific risk) through adequate diversification of the portfolio.
Initially, Sharpe and later Markowitz developed portfolio management theories in which the advantages of the diversification of values are enunciated. Not only securities but diversification can also be given by different markets and even different currencies.
If an investor decided to distribute the assets of his portfolio properly, they would also require a very significant amount. In other words, the investment would not be as profitable. Thus, investment funds are most suitable for investments of an amount according to the average investor.
In this regard, it should be noted that the person interested in investing money in an investment fund should request the information leaflet. It sets out the objectives of the fund, as well as the guidelines that managers will follow.
Any investor knows that the maintenance and adjustment of a portfolio require management. Without it, the portfolio will lose value. Portfolio adjustments are sometimes a cause of headache for investors who place their money through direct investments.
The truth is that it requires a certain level of technical knowledge as well as experience in the field. Although the investor enjoys this experience, he has limited time. The professional management offered by investment funds must be kept in mind.
The names of the managers appear in the information leaflet offered by the marketing entity of the fund itself.
The commissions charged for the management could be equivalent to the portfolio turnover expenses (commissions and other expenses) that would be applicable for the management of the same to an investor in other assets.
All portfolio management has costs, either directly or through a professional team. The costs of rotation and portfolio adjustment to an average investor can be very high when it comes to direct investments.
The maximum amounts of the commissions of the funds are established by Law and are variable to each type of fund. In addition, commissions are deducted from the net asset value of the fund directly.