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All about Mutual Funds

¿What are Mutual Funds?

A mutual fund is a kind of investment fund that is used to focus, invest, and manage the resources of small and medium-scale investors that wish to invest in the stock market.

These funds provides private investors access to both the money market and the capital market as well as to an amount of investment instruments that would otherwise be difficult to access investing individually.

By choosing to invest in mutual funds, investors obtain a high degree of diversification in their personal portfolio, allowing them to obtain higher returns when compared to traditional investments.

Another advantage of choosing to invest in mutual funds is the freedom the investor enjoys from supply and demand speculation: the titles he or she acquires in the mutual fund can be bought and sold at any time subject to the particular fund’s operation policies.

In summary, the purpose of a mutual fund is to combine capital from various individual investors in order to constitute a very well diversified and efficient investment portfolio.

¿How do they work?

Investment decisions made within the context of a specialized fund are made by the fund’s supervising investment committee. Each committee is composed of a team of financial experts which analyzes market conditions in order to make investment decisions with the objective of maximizing investor return.

All securities composing the fund into which investor capital is invested are selected based on a risk diversification criteria; the objective being to avoid concentrating the total investment into any single instrument on the stock market and guaranteeing that said instruments are high-quality.

Investment is continuously re-evaluated according to the returns generated by each of the securities that compose the fund; the price of titles is defined accordingly.

Interest generated by the fund is a result of the daily fluctuation in the price of each title due to the appraisement of investment instruments contained within the fund.