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01/05/2024

Everything you need to know about investment funds, and how to profit from them?


Everything you need to know about investment funds, and how to profit from them?

There are many investment tools that investors resort to, which have become a major part of financial tools, and investment funds are one of the most important of these tools because of the many privileges they offer to investors.


Barclay Parmer spoke in a report on the American site "Investopedia" about the concept of investment funds and their types, and said that the investment fund contains the money of a group of investors, individuals, or moral companies, who decided to benefit from the investment. collectively in several areas.


The fund generates a specific return on investment and is managed by professionals. The capital of investment funds usually consists of millions of dollars and invests in a specific area or several areas.


Investment funds can be classified according to their nature in terms of offering or assets held and are divided into several types:


Types of investment funds depending on the nature of the assets invested


There are many types of investment funds in terms of invested assets, and any financial entity can open a new special type of investment in any new asset according to the conditions of the state financial authority, as happened recently when creating Bitcoin investment funds.

The most famous types of investment funds in terms of origin:

  • Equity funds: This type of fund is the best known and most widespread in the world, it is intended to invest in shares, whether local, regional, or international, and the investment is generally made over the long term. , i.e. 5 years or more.
  • Holding Funds: This type invests in various other types of funds and selects the most important ones to form a financial portfolio for clients comprising the largest and most important global investment funds.
  • Multi-asset investment funds: This type of investment fund is considered one of the least risky types of investment, as it generally resorts to investing in international government bonds, in addition to investing in cash and stock markets.
  • Index Fund: It usually invests in one of the international indices for a specific investment sector, and the most famous types of global indices are Standard & Poor's (S&P) and Dow Jones.

Investment funds in terms of investment area


In another report published by the American investment business site Bankrate, writer Bob Hagel mentioned other types of investment funds, the most important of which are:

  • Growth Stock Fund: This type of investment fund seeks to invest in emerging companies, technology companies, or any type of business that is expected to experience rapid growth, and the main objective of the fund is to increase capital and not distribute profits.
  • Sector funds: seek to invest in specific sectors, such as mining, agriculture, or real estate.


The most important characteristics of investment funds


  • Reduce risks: Investment funds cannot be managed by non-specialists by the regulations and laws that authorize the establishment and formation of this type of investment. Most of the time, investment funds are managed by a group of experts, which goes a long way in reducing risk.
  • Diversification: Mutual funds allow investing in more than one area or sector at the same time, which helps diversify the investment portfolio.
  • Transparency: By law, investment funds publish bulletins on the types of investments that have been made and must disclose them before any type of investment in any new project, which provides a high degree of transparency between management and the owners of the funds. 


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