In the last twenty years, investment funds in Russia are changing and expanding. Each of them has its own scheme of work and level of risk. The greatest income is offered by those funds where the degree of risk is quite high.
What is an investment fund
A mutual investment fund is an association of several investors whose funds a professional manager “invests” in securities to receive income from invested capital. All assets of the fund belong to shareholders, and the management company only manages in the interests of investors.
Legislation prohibits mutual investment funds in Russia from advertising their expected return; they can only provide potential investors with their previous return. Based on these data, citizens decide whether to become shareholders or not.
A bit about share
An investment share is a registered security, it certifies the right of its owner to a part of the property of the fund. It can be transferred to another person (as a gift, by inheritance, etc.) or sold.
The share of the shareholder in the mutual fund directly depends on the funds contributed. The share contribution is different for each mutual fund. It can have a value of several thousand rubles, the upper limit is not outlined.
You can withdraw the money invested in the fund by selling a share. As an option - to other shareholders, but usually the management company is engaged in its implementation.
Pros and cons of mutual funds
The following are the advantages of investment funds in Russia:
- The fund is managed by professionals. Management managers have certificates of the Federal Commission for the Securities Market.
- Minimization of risk. Competent managers take all efforts to diversify investments and reduce the dependence of the investment portfolio on reducing the cost of securities and other risks.
- Reliable investment protection. It includes licensing of the company, certification of specialists, control over the activities of the fund.
- Investment conditions are very convenient. A shareholder can enter and exit the fund at any time.
- Preferential tax system. Income is not subject to income tax.
- Regularly providing investors with up-to-date information about the fund.
It is necessary to mention the disadvantages of this kind of investment:
- Mutual funds will bring income in the medium or long term not earlier than in a year.
- The services of an investment company are not free, it charges a commission for its work, regardless of whether the investor made a profit or "lost" at a loss.
- Each investor can both receive income from the invested funds and "go to zero" without earning anything.
Types of funds
Investment funds in Russia are diverse. For convenience, we present the differences of funds of various types in the form of a table.
Types of fundsCriterion | Types of funds | Description |
By degree of openness | Closed | Units are issued and redeemed during the formation of a mutual fund. Units can be redeemed after the end of the life of the mutual fund. Such funds are most often formed for a specific project. |
Open | Units are issued and redeemed every business day. The assets of an open-end mutual investment fund are securities with high liquidity having exchange quotes. |
Interval | On specific dates that are specified in the rules of the mutual fund (twice or thrice a year for 2 weeks). Assets of the fund are usually securities with low liquidity. |
In the direction of investment | Money market funds | Funds are invested in bills of exchange, certificates of deposit and other short-term deposits. |
Bond funds | Investing in bonds brings a monthly income. The most reliable of the bond funds are government bonds, since securities are issued by the state. |
Equity funds | Joint-stock investment funds in Russia are very popular due to their high profitability, however, the value of the assets of such mutual funds varies greatly depending on the situation on the securities market. |
Mixed Investment Funds | Funds are invested in both stocks and bonds, due to which shareholders receive both fixed income from bonds and good profit with a high degree of risk (from stocks). |
Real Estate Funds | Making a profit is due to the rental property or its resale. |
Fund funds | Funds are invested in other funds, thus ensuring high reliability of the invested funds. |
Sector Funds | Funds are invested in companies operating in the same industry. |
Foreign equity funds | Money can be invested in companies located in different parts of the world. |
Other types of funds
In addition to those presented in the table, there are other types of mutual funds:
- Pension. They invest in bonds and stocks. The duration of the investment depends on the age of the investor. This type is suitable for those who wish to receive income, the rate of which does not exceed 10% per year, after retirement.
- Funds invest only in those industries where you can get high returns with minimal risk, therefore such funds are also called guaranteed. Most often, the safety of investments is ensured by large foreign banks, but only with long-term investment (5-15 years).
- Funds with social responsibility invest in organizations that improve the quality of life of citizens (for example, health).
Profitability rating
Potential shareholders must have information on the reliability of investment funds in Russia. The profitability rating is as follows:
- The leading positions are foundations organized by Sberbank. They are reliable, but they are not highly profitable. The maximum income is 25% per annum.
- In second place are the UIFs of the German group Raiffeisen. The company's profitability level is average (about 40% per annum).
- The third position belongs to the Trust Investment Company. 50-60% profitability and a working life of more than 10 years make it very popular.
These are only the most popular investment funds and companies in Russia, which are most widely used.
Mutual investment funds in Russia have been operating since the mid-1990s. During this time, they managed to gain the trust of citizens as a good way to invest free finance to generate additional income. However, before making a final decision on investing in a particular fund, it is necessary to carefully study the information about it.