Investment Funds Guide – Introduction

Few banking customers have yet to hear about Investment Funds. Probably the vast majority of customers have already been approached by their managers to subscribe to such products.

It is precisely for this reason that it is important to speak a little about Investment Funds, in the sense that for some clients it may not be new and even familiar with this type of investment, but for others Investment Funds are new products, complex and sometimes difficult to understand

In my daily life as a banker, I am often confronted by the outburst of clients who subscribed to Investment Funds totally ignoring the characteristics of the same and obtained unpleasant experiences. In fact, this is nothing new, new investment options are often proposed to customers by announcing higher returns when in fact these returns depend on a number of factors that greatly influence them.

However, following the series of articles on this topic, you will be able to make a quick backup to your financial knowledge whenever you hear the word Investment Fund, or whenever you offer you investment possibilities that are more profitable than the market offers for common savings products.

Investment Funds and their Objectives

Investment Funds and their Objectives

It is clear that the existence of Investment Funds has a clear objective for the Managing Entities and for the clients that acquire them.

This objective is clear to the Entities which results in raising funds for investment in risky or reduced risk assets on a large scale reducing costs and increasing diversity and hence likelihood of profitability. With regard to customers, the objective is to provide access to investment options that would otherwise be impossible to do individually. The idea is simple, for example, if you want to build a portfolio of diversified stocks you need some capital available to acquire and diversify your portfolio in order to reduce risk and increase the probability of gains. This diversification would entail considerable costs which would jeopardize potential profitability.

Reasons to Subscribe to Investment Funds

Reasons to Subscribe to Investment Funds

There are several reasons to buy investment funds, however the most important reason is the fact that the customer can buy an important investment strategy, planned and organized by an entity or manager whose main objective is to make money with the management of the Fund.

Therefore, it is necessary to build and maintain a diversified investment portfolio, have the time to manage and monitor all market indicators that may directly or indirectly influence the profitability of this portfolio, have the experience and know-how sufficient for timely follow-up and determination of investment strategies , is subject to the risk of complex investments, is not a simple task and the generality of clients does not have such capabilities to individually carry out all these steps.

The most important reason for buying investment funds is identified rather than the direct purchase of the assets. All this because investment funds offer investors the possibility of diversification through a broad range of assets with less capital to do so.

It basically buys a stake from a diversified portfolio that has an experienced, results-oriented management team and still benefits from lower costs than investing alone. This is because the costs and charges in the management of an investment fund are distributed by all existing investors.

Types of Investment Funds

Types of Investment Funds

  • Index Funds;
  • Equity Funds;
  • Bond Funds;
  • Mixed Funds;
  • Funds of Funds.



As you may have noticed, investment funds are financial products with a large transformation capacity, in the sense that there may be different types of funds, limiting the capacity and creativity of the Management Entity in determining investment opportunities and defining strategies for the same.

Therefore, the profitability of an investment fund depends on the manager’s ability and experience in, based on analysis, to buy and sell assets at the best price. Therefore, this type of product offers a greater potential for growth and profitability of any investment, because it brings together the diversification, competence, investment strategy, costs of this strategy, objectives, among others, in a single product.