All you need to know about investment funds

what are investment funds? It is an investment tool for which investors and venture capitalists resort for many reasons away from direct investment.

In other words, Investment fund is an investment container managed by an expert who specializes according to specific investment strategy and goals. The fund provides investment benefits that an individual investor cannot achieve individually, given its limited financial resources and investment experience.

What are the advantages of investment funds

The main advantage of investing in investment funds is to take advantage of the experience and knowledge of the fund management in making the best investment decisions and full time by the fund management to follow the developments of the market and the economy, moment by moment, which is something that is not available to many investors directly.

With investment funds, the individual investor cannot make a decision about how the fund's assets should be invested, since they choose the fund simply based on its goals, risks, fees and other factors.

What are the objectives of investment fund?

How do you choose the investment fund that suits your needs?

The investment fund varies according to its objectives and based on your investment goal, you choose the fund, including:

Income fund:

It is a fund whose primary objective is to invest in assets with a distinguished record of cash dividends.

Growth fund:

Its primary goal is to invest in assets that are expected to increase its market value during the period of its investment, as the fund depends mainly on its performance on achieving capital gains and dividend income is not an important factor.

Balanced Fund:

This fund combines two goals, namely capital development and income generation.

what are the types of investment funds?

The investment funds are either open or closed, and are represented in the following:

1- open ended funds:

 It is a fund in which the capital is variable, meaning its units increase or decrease with the entry or exit of some unit owners, and therefore you can sell your stake at any time of the year according to its value at that time, for example: equity funds and debt instrument funds.

2- Closed-End Fund:

It is the opposite of the open fund exactly, where it has a specific capital and it is not permitted to redeem units except at the end of the term of the fund disclosed in the terms and conditions. Or when selling units to other investors, closed investment funds may increase their capital by calling to participate in the fund if the terms and conditions allow this, and for example, real estate investment funds and capital protection funds.

As for the type of investment fund in terms of offering, there are three types:

- Firstly :

A public fund, which is the founding investment fund in the Kingdom, where its units offer a proposal

A year for investors in the Kingdom in accordance with the provisions of Chapter Four of the Investment Funds Regulations.

Second: 

A special fund, which is the founding investment fund in the country, which is not a public fund, and its units offer a special offer to investors in the investor’s country in accordance with the provisions of the investment funds regulation.

- Third :

The foreign fund is the investment fund established outside the investor’s country where its units offer a special offer to investors in the country in accordance with the provisions of the investment funds regulation.

What are investment funds simply?

Mutual funds are an appropriate investment vehicle for small investors, given that the fund contains many stocks and bonds, so the investor gets the advantage of diversification and relatively less risk than direct investment in the stock market.