A mutual fund is an investment alternative consisting of gathering the assets of different people, natural or legal, and investing them in financial instruments, a task carried out by the Administrative Company.
The instruments they can invest in may vary according to the fund and their Investment Policy, which is in its Internal Regulation, approved by the Superintendency of Securities and Insurance. In this way, the different types of existing funds determine what allows you to select the one that best fits your situation.
Mutual funds are a diversified alternative since they invest in numerous instruments. They do not have expiration dates or require renovations, so they are very comfortable. In addition, they allow their money to be available with much ease (liquidity).
What Types of Mutual Funds Exist?
- The first division is between debt funds (which invest in instruments such as term deposits, bonds, or mortgage bills) and capitalization funds (shares).
- The second categorization is between funds that can only invest in Chile and funds that invest abroad.
- The third category is funded, in which contributions and redemptions happen between the Chilean peso and the US dollar.
Discover mutual funds tailored for short-term debt instruments with a duration of 90 days or less, as well as options for terms up to 365 days. Additionally, explore mutual funds designed for investment in medium and long-term debt instruments.
Mixed Mutual Funds
Explore mutual funds specializing in capitalization instruments or opt for those offering freedom in investment choices. The significance lies in having a diverse portfolio—a distinct Investment Policy governs each fund. This allows you to align investments precisely with your unique needs, preferences, and investor profile.
Advantages of Mutual Funds
Cost-effectiveness- Security
- Liquidity (availability)
- The comfort of not having to renew the investment
- Diversification, which reduces the risk
- Globalization
- Multiple alternatives
Associated Concepts
Contribution
It is an investment made in mutual funds.
Rescue
It is the withdrawal of money from a mutual fund.
Quota
The unit of measure in which the fund’s assets are divided. Thus, when a person contributes to mutual funds, he acquires a certain number of installments according to the value of the corresponding quota.
Value Share
It is the value that the quota has at a particular moment, and it is equivalent to the Fund’s equity divided by the number of shares outstanding. The quota value changes daily and reflects the profitability of the mutual fund.
Participant
It is the person who has money invested in a mutual fund. It has quotas for this one.
Equity
Refers to the total amount of money invested in the fund, that is, the total of the investments made by the fund participants (plus profits) minus the redemptions, expenses, and distribution of the profits.
Investment Policy
It is what establishes what a mutual fund can and cannot invest. It is in its internal regulations, approved by the Superintendency of Securities and Insurance.
Benchmark
Index of comparison of the performance of a specific mutual fund. It seeks to simplify the understanding of the destination of the investment. It allows the client to compare the performance of the Mutual Fund regarding profitability and risk. See Benchmark table.
Remuneration
The percentage of the mutual fund that the administrator charges for managing the funds, the final profitability for the client, and the shared values have already discounted this cost.
Commission
It is a cost that the client must pay to redeem the money from his mutual fund before the minimum period of permanence defined for the fund. Not all mutual funds contemplate charging a commission.
Tax benefit
Taxes are due only if the money is withdrawn (if rescues are done) for the profit obtained in mutual funds. In addition, investments in mutual funds allow the use of certain tax benefits granted by the Income Law.
Conclusion
In the complex landscape of investment, mutual funds emerge as a versatile option, pooling the resources of diverse individuals and entities for strategic investments in financial instruments. Administered by specialized companies, these funds offer a range of investment options governed by internal regulations approved by regulatory authorities.
In summary, understanding the intricacies of mutual funds empowers investors to make informed choices aligned with their financial goals and risk tolerance. The diverse range of fund types and associated concepts facilitates a tailored approach to investment, making mutual funds a valuable tool in finance.
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