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The mutual funds They are one of the star products in the investing world. Last year was undoubtedly one of the best exercises for funds in Spain. The association of collective investment institutions, Inverco, notified inflows of almost 25,000 million euros to these products, the highest amount in more than five years.

The good returns of the markets, in addition, boosted the assets under management to 316,084 million, 15.1% more than the previous year, according to provisional data. Investing in a fund, like other processes in life, requires prior knowledge and learning.

An investment fund is a collective investment product (IIC). It brings together the contributions of the participants (people) to invest their savings. The sum of all these capital contributions goes to a larger fund, created to diversify this capital among different assets: fixed income, variable income …

The objective of this investment vehicle is to achieve the best possible conditions. Those impossible to gather in an investment on your own. One of its strengths is security, since management falls to professionals. Not to mention that the funds are supervised by official bodies, such as market regulators. The National Securities Market Commission (CNMV) ensures that the transparency, liquidity and diversification factors required by regulation are met.

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There are countless types of funds. But to understand them well, you have to know the ‘abc’ of characteristics or parts that compose them. In the first place, as mentioned before, there are the fund participants, the people who invest their money, through contributions, with the aim of achieving a return on that capital.

The management company is the main element of trust, since the managers, professionals who invest the fund’s capital, work under its name. That is why a fund does not have a legal personality, but rather a “management company”. It manages the fund, but is not the owner. The owners are all participants in the fund.

A third actor is the depository entity, in charge of guarding and monitoring the patrimony (securities and financial assets). It has some control over the management company and a different nature, being, for example, a savings bank.

Then there are the “automatisms” of the investors. Buying shares in a fund is called a subscription. Otherwise, the sale of shares is a refund. And the net asset value is the value of that share in the market, which is calculated as the division between the total assets of the fund and the number of shares of an investor.

Just as a fund always seeks a return over a period of time (the investment period), this ‘prize’ for the investor cannot be understood without its nmesis: commissions. The most common in a fund are those of management, subscription and redemption, deposit or success. And, indeed, they are enemy number 1 of a fund’s investors.

But not everything is bad news and commissions. Mutual funds have a tax advantage: making a fund transfer (moving money from one fund to another) is tax-free. The only condition to get rid of the tax toll is that the origin and destination funds are Community funds and are registered with the CNMV.

The Finect website has a wide variety of investment fund showcases, from megatendencias, technology The socially responsible investment, to investment in funds by geography, such as U.S The emerging marketss. Also from the web you can compare multiple funds at the same time.

Operation of a fund

Once the parties and protagonists of this type of investment vehicle have been clarified, it remains to be seen how it works. This is how a fund works from the investor’s point of view:

1. The investor chooses the fund or contact a financial advisor to help you choose the most suitable for your investor profile. Some of the basic questions to choose one or the other are: What is the risk profile of the fund? What investment policy does it follow? What is its historical profitability? What commissions do you charge and how much?

2. The price of a fund’s shares is obtained by dividing the fund’s assets among the shareholders.

3. Any investor can buy or sell their shares at any time. That is, subscribe or refund.

4. The change of funds is called a transfer, and as we mentioned before, it is exempt from tax.

5. In addition, the investor is only taxed when the shares are reimbursed and they obtain a profit.

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