Which Are The Best Performing Investment Funds & How To Invest Into It?

What are Investment Funds?

Investment Funds are pooled or cooperative investment vehicles where all the money from all the individual investors is put together under the name of the Fund.

Investment Funds owns the money of the Investors and has a liability against the individual investor. This is in opposite to segregated funds (or segregated investment), where each investment is kept under the name of the investor, and it is not allowed to pool or mix the investments.

Is there any difference between Investment Funds and Segregated Funds?

It might sound trivial but the difference is big and plays out in case of bankruptcy of the fund or other partners like banks or brokers. While the segregated funds are always under the name of the investor and in case of bankruptcy, they cannot be taken as collateral, this might be different in a pooled investment.

Whereas, the pooled investment fund has benefits, too. For example, it is much easier to manage an Investment Fund than Segregated Fund, because the fund manager of an Investment Fund can just buy, for example 1 Mio. shares for the fund, while the fund manager of segregated accounts has to buy 1000 times 1000 shares for each of his customers.

In addition, it is easier for the fund manager of pooled investment fund to charge cost to the fund vehicle, while the segregated account makes every cost booking visible on account statement of the investor.

Investment Funds can start as small as from 10 CHF while most segregated accounts have high minimum investments.

Investment Funds are important for many persons, be it someone who just started to earn his living, or one who is preparing to retire, investing for better returns is something that is on everyone's mind.

Different Types Of Investment Funds

There are different types of Investment funds, which are popular all over the world. People around the globe choose from different funds to invest in.

Let us discuss in-detail about the different types of Investment funds as below:

1.  Mutual Funds:

Mutual fund investment is a wise choice for everyone in different parts of the world. Investment companies collect money from individual investors and create a large pool of investment. This pool is then invested in different bonds, securities or stocks. Since these assets are now part of a huge pool, the investors have some incentives in the Funds management (Tyson, 2010).

What are Mutual Funds?

Mutual Funds as the meaning of mutual indicates, are a pool of funds that are collected to invest to get higher returns. The funds or assets that are part of the pool are collected from more than one investor. The collected funds are then invested in different bonds, securities or stocks.

Mutual Funds can be defined as some vehicle that carries more than one investment. Investing in Mutual funds mean that the investor is contributing to a pool that will further invest in different types of bonds or stocks.

How Mutual Funds Works?

Mutual funds being a collection of different investments i.e. bonds, securities or stocks, are owned by more than one investor, and managed by fund managers. The fund management is done by professional fund managers of the stock market.

When it comes to the objective of this type of investment funds, it plays an important role in determining the type of securities, this fund will buy.

Things Every Investor Should Know About Mutual Funds:

When you decide to invest in mutual fund, then you must know what are its advantages, disadvantages and other important factors, while investing in mutual funds. There are a lot of things, which define mutual funds as best investment fund; some of them are as follow:

  • Convenient way of Investing:

    Mutual funds are also known as convenient way of investing since you are not the only investor. The mutual funds include more than one investor which means that the management cost of buying will be reduced.

  • Performance:

    Mutual fund performance is not a predictable thing. There are lot of investors who check the past mutual fund performance and decide to go with it. Only little people know that the past record of the mutual funds has no effect on its future performance.

    Investors cannot predict how much return they will get from it. It is even the case that some funds with high performance get an inflow of money and need to put the money somewhere and decrease the performance by unwise decisions.

  • Fees:

    Fees and charges are a letdown when it comes to mutual fund performance. Since to buy or sell the mutual funds, one need services of the fund managers which means that you will have to pay him for his services. A lot of profit is lost somewhere between paying fees and surcharges that are attached to the mutual funds.

  • Selling your Shares:

    One of the major drawbacks of the mutual funds is that they are not easy to sell. Firstly, you will hardly find a buyer who is ready to pay your desired amount. Moreover, even if you manage to find a buyer, you will have to pay the up-charge (additional fee).

    Most mutual funds are bought directly from the fund company with the help of salesman. Mutual fund salesman gets from 2% to 20% of the investment amount if the customer buys over them. If the mutual funds are traded over an exchange, it is cheaper to buy them over the exchange.

    If mutual funds are not exchange traded the buyer might get a problem, if he want to sell them again because he can only sell it back to the fund company. If the fund is not running well the fund company will probably reject the purchase of the fund from the customer.

2.  Real Estate Funds:

Real Estate funds are the most old school way of investing your funds. Investing your saving in a property for the sake of getting monthly or yearly rents/benefits is what real estate funds is all about.

What is Real Estate Funds?

Real Estate Funds are portfolio of the diverse real estate holdings managed by professional managers. The Real Estate Funds are of different potentials i.e. investing in real estate or in a family or private residence to commercial developments.

It is up-to investor to decide which type of Real Estate investment suits them the best. The area of the real estate is real wide and has a huge variety for investors to look at (Wickell, 2004).

Why Real Estate Funds?

Investors all over the world found Real Estate Funds Investing to be one of the handiest types of investment funds. Investors find the private or residential properties to be perfect to start with. Investing in the residential properties is a safest way of investment to them; however, it is important to choose it wisely.

Other than residential properties, there is a wide range of options to choose from which includes land development, commercial real estate, manage an apartment and so on.

Things Every Investor Should Know About Real Estate Funds:

Following are some important things that everyone should know about Real Estate Funds:

  • Comfortable

    Real Estate Investment Fund is considered to be one of the most comfortable types of investment for almost all classes of the society. People can easily relate to real estate since they must have heard their parents talking about owning a house.

  • Tangible:

    One thing that brings the feel of security is the fact that Real Estate Funds are tangible. Real Estate Investors knows that they owns the piece of property and it is not something that only exists in the papers. The sense of security is an edge that every investor is always looking for.

  • Huge Amount of Work:

    Real Estate Funds might bring you the sense of security; however, there's a lot of work that investor has to do. Buying house is not an easy thing. You have to search the one that only fits your budget, but will also bring good amount of rent or benefits every month.

  • Resale Value:

    You might always think that real estate market is always stable, which is in a certain way true, but the fact that a lot of investors are unaware of is that, usually there is no buyer in the market. You can face a serious hard time when you try re-selling your property.

3.  REIT Funds:

REIT (Real Estate Investment Trust) fund is one of the common types of investment funds. REIT Funds and Real Estate Funds do have certain similarities but both of them are classified as two different types of investment funds.

There are different types of REITs such as Publicly Traded REITs, Public Non-Traded REITs, Private REITs, Equity REIT, Mortgage REIT and Hybrid REIT. (We'll cover these in our upcoming articles/blog posts in 2018.)

What is REIT Funds?

REIT Funds is an investment preferred by investors to indirectly invest in the real estate without putting anything at risk. REIT Funds invests in different types of properties including villa, commercial space or apartments that can generate monthly rental income.

Using Real Estate Investment Trust Funds, the investor cannot directly invest, it is operated through the trust. Almost 90% of the profit is distributed to the unit holders by law (Rubina 2013, 2014).

Why REIT Funds?

REIT Funds is the safer version of the Real Estate Funds. Unlike Real Estate Funds, the investor does not have to move place to place, looking for the best piece of investment for the money they have. REIT does all the work for them and investor invests their capital indirectly into real estate.

Things Every Investor Should Know About REIT Funds:

Following are few things that every investor should know about REIT Funds:

  • Large Payout:

    One of the main reasons behind going for any type of investment funds is to get high payouts and REIT Funds completely fits for this reason of investing. As 90% of the profit goes to the unit holder, thus Payout is very high.

  • Liquid Asset:

    The main drawback of Real Estate Fund i.e. the problem in finding the right buyer to sell your property, is well covered in REIT Funds. Whenever you feel like it is time for you to move on from the property you own, instead of selling it, all you have to do is sell your part of the Shares.

  • Falling Share Prices:

    REIT Funds are not as convenient as they sound to be. One of the biggest drawbacks is that, the share prices can fall down dramatically. As soon as there is decline in real estate market, Shares prices goes down.

  • High Transaction Fees:

    Hidden or untold fees that happen to pop out, are not a pleasant surprise to any investor of REIT Funds. At times, there are high transaction and management fees which lead to lower Payouts.

    The lower payouts means that Shareholders will get less profit, which can be highly disappointing.

4.  Close Funds (Close-End Funds)

Close Funds, also known as Close-Ended funds are a cross between the Stock and Mutual Funds. Close Funds have a potential of trading discounts up to double digits to the total asset value which creates further opportunities (Fredman, 2000).

What is Close Funds?

Close Funds also known as Close-End or Close-Ended Funds are a pool of investment. Managing of this pool of investment is done by the fund manager. Through the IPO (Initial Public Offering), there can be a raise in the fixed amount of the capital. As Close Fund is a cross of Stock and Mutual Funds, it is usually traded and listed like Stock.

Why Close Funds:

Close End Funds structure allows the fund manager to work with a decent pool of the capital. Close-End Funds have no problems related to inflows or outflows of the Cash thus they allow the fund manager to invest for long term oriented options.

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Things Every Investor Should Know About Closed End Funds:

Following are some important things that every investor should know about the Closed End Funds:

  • Managing Close Funds:

    A common fact about the investors is that they do not want to be solely responsible for the decisions that they make. At some point they do lack the knowledge about the stock market, especially if they are new to it.

    Close Funds are managed by fund managers, which mean that investor does not have to rely on his knowledge. The fund manager will do all the work while keeping the investor free of hassles.

  • Larger Dividends:

    The best thing about Close Funds is that they pay larger dividends as compared to traditional funds. Close Funds tends to produce much more income to its investor.

    These types of funds are best investment options for people who are more inclined towards the larger dividends, and investors who are looking for income-oriented portfolio.

  • Shares:

    The reacting nature of Close Funds is different from traditional funds. The reason behind it is the fact that there is reflection of funds Total Asset Value, and is more of a subject to condition of the market. Furthermore, the total amount of Shares is usually limited to total numbers that are issued by Fund Company.

  • Tax:

    Taxes are one of the big issues that are part of Close-End Fund. Despite the struggle for larger yields, there are chances that they might invest in Stocks and Bonds.

    This might be more profitable for the dividends as compared to other common stock; however, Close Funds might result in being taxed for funds payout, considered to be income, instead of low dividend tax rate.

  • Duration:

    Close funds have a duration, and it's not possible to exit or sell the fund before the end of its duration. You might need to hold the fund for 5 years, 10 years or even 20 years without being able to liquidate it.

5.  Open Funds:

Open Funds (also known as Open-End Funds) does not have any type of restrictions regarding amount or number of shares that a fund can issue. This no-restriction quality of Open-End Funds makes it stand out from other types of investment funds. Open Funds provides its investor a useful as well as very convenient vehicle of investing. Open-End Funds are a type of Mutual Funds (Louis, 2014).

What is Open-End Funds?

Open-End Funds buy as well as sells the units on the regular basis which allows the investor to enter or to exit whenever he aims to. These units are bought or sold at NAV (Net Asset Value) that is declared by the fund. Total number of units can go up and down each time a fund house re-purchases or sells existing units.

Why Open-End Funds?

Open-End Funds has zero restrictions to the number of shares that can be issued by the fund. Open End Investment Funds are best for investor who do not have time to keep a close eye on their portfolio and still aims for high returns.

Open Funds are managed by fund manager, which makes the life of the investors hassle free. However, Open Funds do not have any restriction of involving the fund manager. The investor can buy or sell his share without taking anyone's help.

Things Every Investor Should Know About Open End Funds:

Following are few things that every investor should know about the Open-Ended Funds:

  • Easy access:

    Open Open-Ended Funds are popular among masses due to their one quality i.e. accessibility. Open Funds are easy to access and can be found by almost everyone. They are very straight-forward and easy to understand, which saves the investors from additional hassle of understanding them (Aden, 2012).

  • Freedom to Enter or Exit:

    One of the biggest advantage Open-End Funds offer to its investors is the freedom to enter or exit the market whenever they want. As mentioned above that Open Funds have easy accessibility which means that one can easily buy or sell them whenever they want.

  • Asset Reliability:

    The reliability of the asset valuation is one big drawback of Open-Ended Funds. Whenever an investor purchases some units of an existing fund, he basically takes ownership (proportional) of entire existing assets based on price that is determined by the subjective valuation.

    Since the Open Funds lack with objective market price, when it comes to real value of asset, investors are bound to rely on third parties for the valuation services (Jacob, 2013).

  • Higher Expenses:

    Open funds have pretty many high expenses as compared to other funds in form of money taken from your investment every year. The expenses can reduce the payout, which investor expects from their Open Funds (Aden, 2012).

6.  Professional Funds:

For the big investors who are all about investing high amount and getting even higher returns, Professional Funds are the best investment funds to go with for them. Professional Funds are the go-to investing funds for the people who have high net worth often called as high net worth individuals. This type of investment funds is popular all around the globe.

What is Professional Funds?

Professional Funds as the name indicates, are for professional investors who take investing their money seriously. Professional funds are not for the investors who enter and exit market every now and then. Professional Funds are for the investors who have high net worth.

Why Professional Funds:

Professional Funds are managed by fund managers and offers relief, not only to the investors but also to the fund managers. Professional Funds are basically managed by a combined partnership of the fund managers and the investors. The investor invests their money to fund and the fund managers use this money to buy a variety of the financial instruments (Northcott, 2010).

Things every investor should know about Professional Funds:

Following are few things that every investor should know about the Professional Funds:

  • Good Performance:

    Since the Professional funds have further types including hedge fund which is why it is safe to say that this type of investment fund have good performance as compared to other types of funds. Moreover, since this type of investment fund is all about big investments, so the return is also very high.

  • Investment Diversification:

    As mentioned earlier that Professional Funds are for big investors who have huge net worth to spend, which is why, professional investment funds allows diversification to the investors. Investors have freedom to invest in more than one thing.

  • High Fees:

    Talking about the letdown that comes with most of the types of investment fund is high fees. Same is the case with Professional Funds. Fees and charges of Professional Funds are on higher side, which reduces the Payout.

  • Ties up Money:

    Another drawback of the Professional Funds is that it ties up the investors' money. If you have invested in Professional funds then it is not easy to withdraw the money whenever you want to exit the market.

7.  Money Market Funds:

A mix of Mutual Funds and Open Ended Funds, Money Market Funds is famous type of investment fund. Money Market Funds solely invest in cash or securities that are cash equivalent and will be matured within one year or even less.

What are Money Market Funds?

Money Market Funds is a type of investment funds, which has the objective to maintain the NAV (Net Asset Value) while earning interest for the Shareholders. In simple word, the investor at the end of the day will get the amount he invested along with earned interest. Money Market Funds can be bought easily through Mutual Funds, Banks and Brokerage.

Why Money Market Funds?

Money Market Funds are the best option for the investors who are looking for some short term investments. The main purpose of the Money Market Funds is to offer investors a safe place where they can invest their money in cash equivalent assets with low risk rate. Money Market Funds is the key to earn interest without compromising on the NAV (Chandra, 2014).

Things Every Investor Should Know About Money Market Funds:

Following are the list of things that every investor should know about the Money Market Funds:

  • Short Term Investment:

    There are a lot of investors who are out there looking to make some investments but are afraid to get stuck for a long period of time. For such people (looking for short term investments with high returns) Money Market Funds is the good investment option to go with. The cash equivalent certificates are usually matured within a year, which is why it is known as best short term investment.

  • Low Risk:

    Among all types of investment funds, Money Market Funds has the lowest risk factor. It also offers consistent yield which is important for the liquidity. Money Market Funds are proved to be the most stable ones in the market which gives good returns to its investors while keeping NAV intact (Kant, 2011).

  • Limited Withdrawals:

    Money Market Fund is an easy way to invest however when it comes to money market funds regulation; there is a limit when it comes to total number of transfer or withdrawals one can make. This is a major drawback, since if you need to make an emergency withdrawal and you have exceeded your limits then you are stuck with it. There isn't much that you can do with the limitations.

  • Fluctuation in Interest Rates and Fees:

    Money Market Funds do keep your NAV intact and brings in monthly interest. However, an important thing to remember is that the interest rates is never constant. The interest fluctuates every now and then which means you might get less return. Moreover, at times there are some unwanted fees that are attached to Money Market Funds.

8.  Bond Funds:

Investors who prefer to invest their money, but are not buying a bond, this type of people should go for Bond Funds. Similar to different types of investment funds, Bond Funds are also managed by the fund manager which means that the investor gets to relax his nerve while investing their money.

What is Bond Funds?

Bond Funds is a funds vehicle which allows the investor to invest their money in a pool with other investors. Bond Funds do not mature on its own, like regular bonds. The fund managers have to add new bonds to the portfolio once the old bonds are sold. Bond Funds are more fragile than regular bonds which usually invest in a year or sometimes even less (Dielen, 2015).

Why Bond Funds?

Bond Funds are the perfect investing option for people who want to invest but not in regular bonds. People investing in Bond Funds can go for long-term or short-term investment as per their choice. Bond Funds allows people to invest in different types of stocks or securities along with other investors.

Things Every Investor Should Know About Bond Funds:

Following are few things that every investor should know about Bond Funds:

  • Diversity:

    Diversity is the key to success when it comes to Investment Funds. Bond Funds offers the element of diversity to its investors. There are different types of Bond Funds available in the market which includes Government, Corporate, Inflation-Protected and Mortgage-Backed Bond Funds. The investor is free to choose the type of Bond Funds they want to go with.

  • Easy to Sell:

    While entering the stock market, every investor thinks about the safe exit as well. There are a lot of investment funds that do not allow the investor to quit whenever they want. However, Bond Funds standouts them all and are very easy to sell, which means that the investor can sell their shares and exit the market.

  • Risk of Interest Rates:

    In most types of investment funds, the interest rate rises as the price of the share rise, however, not in Bond Funds. The interest rate has a reverse relationship with the price of the share which means when the price of the share increases, the interest rate goes down.

  • Principal Risk:

    Although Bond Funds are easy to sell, there is a risk in it as well. When someone plans on selling his share, he will revive the current NAV of the share i.e. the total value of Funds Holding which is divided by Total Number of Fund Shares. If the current NAV is lower, then the day you bought it, you will be in loss.

9.  Stock Funds:

A Stock Fund also known as Equity fund is type of investment fund that lets the investor to invest in the stocks. Stock Fund is similar to Bond Fund. People who want to invest but not directly by buying a stock from the stock market, prefers to go with Stock Funds. Stock Funds are also managed by the fund managers.

What is Stock Fund?

Stock Funds are directly related to each other. Investors who prefer to invest in stock but by investing in pool funds collected by other investors are inclined towards Stock Funds. Stock Funds are managed by fund managers, who invest the investors' money in the Stock Market (Kang, 2010)

Why Stock Funds?

Stock Fund is the perfect investment option for people who want to invest in long term benefits. Stock Fund offers long term growth rather than only focusing on the income. Fund manager finds the Stock that has most rapid growth in the market and then invests the pool of investments in that specific Stock (Kang, 2010).

Things Everyone Should Know About Stock Fund:

Following are few things that every investor should know about Stock Funds.

  • Increase in Cash Dividend:

    Investing in Stock Fund is not only beneficial in long run but there are short terms benefits as well. The profit of Stock Fund not only increases every year, but it also increases the cash dividend which makes it one of the best type of investment funds to invest in (Jay D. H., 2013).

  • Diversification:

    Investment diversification is also a key factor of Stock Fund. Diversification allows the investor to invest in more than one thing, which means he will get benefits from more than one thing. Stock Fund completely fits this requirement of the investors all over the world.

  • Price Fluctuation

    Talking about the letdown of the Stock Fund, one cannot ignore price fluctuation. There are different types of Stocks in the market and unfortunately all of them lack in stable price. There are different market factors which leads the Stock Fund price to fluctuate every now and then.

  • Tax and Fees:

    A common drawback which is almost part of every investment fund is tax and fees. Since Stock Fund is managed by fund managers, thus you have to pay heavy fees. Moreover there are other fees that every investor of pool funds has to pay every year which reduces the yearly profit.

10.  Alternative Investment Funds:

Alternative Investment Fund is different type of investment fund. It is not one of the conventional type of funds, such as Bonds, Cash and Stocks. Basically an Alternative Investment Fund can invest in everything, in fact many Alternative Investment Funds invest in (or with) automated trading strategies and in derivatives investment vehicles.

Some Alternative Investment Funds even have banks issuing special derivatives for their investment. There are different limited AIFMD (Alternative Investment Fund Managers Directive 2011/61/EU) regulations of investments due to the complex nature of the Alternative Investment Funds which is why they are slightly more popular as compared to other type of investment funds.

What is Alternative Investment Funds?

The term "Alternative Investment Funds" due to its complex nature is defined as Investment Product. Alternative Investment Funds differs from other types of investment funds in terms of low correlation, use of huge variety of techniques and dynamic strategies of trading. The special features of Alternative Investment Funds makes it popular among different types of investors (Archerselevators, 2015).

Asset Management World:

Recently Alternative Investment Funds has captured the spot light in the world of asset management since the interest rate has increased the correlation between Bonds and Stocks.

The buzz around Alternative Investment Funds is increasing and asset management has offered dedicated information about Alternative Investment Funds (AIF) as the distinct class (Insight, 2014).

AIF and Fund Managers:

One of the most important thing about AIF is to channel the investment flow. Since AIF are managed by fund managers, which is why it is important for them to make sure that investment flows in different but huge range of opportunities.

To meet the needs of the client, it is important that fund managers of AIF must be ready to adopt flexible operating and business models (Mellon).

AIF and Future:

For over three decades the industry of Alternative Investment Funds has evolved and became a very important part of global economy and financial system. The growth of AIF industry determined to range of external factors with some regulatory changes, technological development and economic cycles.

When it comes to future of AIF, it is also affected by macro factors, monetary policy and ageing in some of the developed economies (Forum, 2015).

Forex managed Funds, for example, are under the category of AIF. As most Forex is not traded at regulated Exchanges, Forex Fond Manager can basically make every price for the customers or his Forex Fund.

The development of Forex Fund is totally in hands of (unregulated) Broker and (unregulated) Exchange, while every Dollar which the investor loses, the Broker and Exchange wins.

This is even written in terms of most Forex Managed Funds, if they are sold in a regulated country like USA. If an Investor invests in a Forex Fund in a non-regulated (or nearly non-regulated) country, the investor is totally in hand of the Forex Fund Operator.

For example, they bought some Stocks and they hedged (secured) the Stocks with options against losing in value; it is one of hedge fund strategies.

In the '80s, many Hedge Fund Managers were able to have magically outstanding results even when the market was down.

Other types of AIF are Commodity Funds, which invest in exchange-traded commodities like Softs (Wheat, Corn, Hog, Milk, and Cattle), Metals (Iron-Ore, Gold, Silver, and Copper), Energy (Crude-Oil, Heating-Oil, Gasoline, and Natural-Gas) or even exotic things like Volatility.

11.  Exchange Traded Funds (ETF)

One of the lowest risk carrying type of investment funds is Exchange Traded Funds, commonly known as ETFs or ETF Funds. The popularity of the ETF Funds has increased to a huge amount in last decade and it still garbs the attention of the investors. There are lot of factors involved in the popularity of ETF Funds which includes their simplicity (Calicchio).

What is ETF Funds?

ETF (Exchange Traded Funds) is basically a security that tracks bonds, index, commodities or even a pool of assets. ETF Funds trades more like a common stock. The prices of ETF Funds do fluctuate the entire day i.e. the day it is bought or sold. It is known as attractive alternative, among the individual investors.

Why ETF Funds?

The reason people prefer to go with ETF Funds is that, in comparison to the index or mutual funds, ETF Funds are fairly less expensive. Moreover, there is no need to frequently manage the ETF Funds like other regular funds which is why the investor usually ends up paying less amount of fees to manage ETF Funds (Whelton, 2013).

Things Every Investor Should Know About ETFs:

Following are few things that every investor should know about ETFs (Exchange Traded Funds):

  • Transparency:

    The best thing about ETF Funds is that they are extremely transparent. Investors have an idea of what he should expect with ETF Funds. The fact that the price of ETF Funds will keep on fluctuating entire day remains true. The investors of ETF Funds do not get unpleasant surprises at the end of the day.

  • Easy availability:

    ETFs are usually available in almost all the sectors which includes the precious metals (metal ETF) Health-Care, Oil & Gas and so on. The easy availability of ETF Funds is one of the key factors behind its huge popularity.

  • Can be limited to Large Companies.

    There are some countries where the investors have a limitation of the large cap stocks due to the narrow stock in market index which means that only large stocks will be able to limit available exposure to small or mid-cap companies. This can result in making ETF Funds out of reach for some investors.

  • Leveraged Returns:

    There are some ETF Funds which are double or sometimes of triple leverage, that can possibly result in losing double or even triple tracked index. If ETF Funds are helpful for more than one day, there are lot of chances that the investors have to bear double or triple loss.

12.  UCIT Funds

The UCIT (Undertakings for Collective Investment in Transferable Securities) Funds, are the type of funds which are licensed for the Swiss as well as European Investors under harmonized regulatory regime.

What is UCIT Funds?

UCIT Funds is basically a framework of European Commission which creates harmonized regime all around the Europe to manage and for the sale of the mutual funds. UCIT Funds are to be registered in the Europe. However, the investor can sell them worldwide by using the unified regulatory as well as investor protection requirement.

Things Every Investor Should Know About UCIT Funds:

Following are few things that every investor should know about UCIT Funds:

  • Retail investors:

    UCIT Funds is a good investment option to go with for retail investors around the globe, since the standard of the disclosure remains intact and investment guidelines for funds also remain on a consistent level.

  • Transparent:

    Even though UCIT Funds constrains the investor to a certain extent when it comes to make their own choice of investment to go with, however, the strategies that are able to fit with requirements are extremely transparent under the EU laws.

Investment today is one of the few ways that can help everyone to deal with the inflation. Inflation devalues your money every year. To completely outpace the inflation, one needs his money or savings to grow fast (Kane, 2014).

When it comes to objective of earning, the main focus is on improving the quality standards of your life. Investment is a decision that you make to put some part of your money or income aside, so that you can get something out of it in future (Dampier, 2015)

As investment is more about your future, no one wants to leave any stone unturned. People tend to go at length to secure their future and for which they need to make better decisions.

It is strongly advised to European investors to only invest in UCIT funds or funds which are "Tax Transparent" according to their countries legal and tax systems. Many European countries have punishment taxes for investments in non-tax transparent funds.

In addition to this, many non-European countries like US have a withholding tax for foreign investors under which they keep some percentage, for example 30%, of the dividends.

This withholding is only paid to investors who make a tax declaration in these countries, for example to receive the US withholding tax back (or at least a part of it) you would have to hire a US tax advisor and pay between 1000 to 2000US $ to get a part of the withholding tax back. In many cases it is not just about the 1000 USD but more about the work associated with it.


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