How to Invest Your Money in Best Performing Investment Funds

Introduction to 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 Funds. The Investment Fund owns the money of the Investors and the Investment Fund has a liability against the individual investor. This is in opposite to the 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. This 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 or segregated investments are always under the name of the investor and in case of a bankruptcy they cannot be taken as collateral this might be different in a pooled investment. But the pooled Investment Fund has benefits, too. For example it is much easier to manage an Investment Fund then segregated account 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 1 000 times 1 000 shares for each of his customers. In addition it is easier for the Fund Manager of the pooled investment Fund to charge cost to the fund vehicle while the segregated account makes every cost booking visible on the 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. 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 about more about your future which is why 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.

Types of Investment funds:

There are some common types of Investment funds that are famous all over the world. People around the globe choose from different funds to invest in. Some of the different types of funds are as follow:

  • Mutual Fund
  • Real Estate Funds
  • REIT Funds
  • Close Funds
  • Open funds
  • Professional Funds
  • Money Market Funds
  • Bond Funds
  • Stock Funds
  • Alternative Investment Funds
  • ETF Funds
  • UCIT Funds

Types of Investment Funds:

People who are new to investment can study in-detail the types of Investment funds below:

1.  Mutual Funds:

Mutual funds are a wise choice for everyone from different part of the world. Investment companies combine people’s money with money collected from other investors and create a large pool of the assets. This pool is then invested in different bonds, securities or stocks. Since these assets are now part of a huge pool which is why the investors have some incentives in the management of the Funds(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 high returns. The funds or assets that are part of the pool are collected by more than one investor. The collected funds or assets 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 the Mutual funds meanthat the investor is contributing to a pool that will further invest in different types of bonds or stocks (Tyson, 2010).

How mutual funds work?

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

There are a lot of things that define mutual funds. 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 when investing. The mutual funds include more than one investor which means that the management cost of buying the stocks, securities or bonds will be minimized.

  • Performance:

    The mutual fund performance is not a predictable thing. There are a lot investors who check the past mutual fund performance and decide to go with it. Little did they know that the past record of the mutual funds has no effect on the 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 the up-charge which is an additional fee. Most mutual funds are bought direct 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 a family or private residence to commercial developments. It is up-to invest 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?

Investor all over the world fined Real Estate Funds 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 a apartment and so on.

Things every investor should know about Real Estate Funds:

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

  • Comfortable investment:

    Real Estate Funds is considered to be one of the most comfortable types of investment for almost all classes of the society. People can easily relate to the real estate since they must have heard more than once their parents talking about owning a house (Jay, 2013).

  • Tangible investment:

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

  • Huge amount of work:

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

  • Resale value:

    You might always think that the 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 house.

3.  REIT Funds:

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

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 REIT Funds, the investor cannot directly invest. The investment is operated through the trust. Almost 90% of the profit is distributed to the unit holders by law(rubina2013, 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 he has. The trust does all the work for him and the investor gets to invest his savings or capital indirectly to the 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 this reason of investing. As 90% of the profit goes to the unit holder which means that the payout is very high.

  • Liquid asset:

    One hassle that is considered to be 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 the property, all you have to do is sell your part of the shares.

  • Falling share prices:

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

  • High transaction fees:

    The hidden or untold fees that happen to pop out are not a pleasant surprise to any investor of the REIT Funds. At times, there are high transaction and management fees which lead to the lower payouts. The lower payouts mean that the shareholders will get less profit which can be highly disappointing.

4.  Close Funds:

The 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?

A Close Funds also known as Close Ended Funds are a pool of investment. The fund management 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, which is why it is usually traded and listed like stock.

Why Close Funds:

The structures of the Close Funds allow the fund manager to work with a decent pool of the capital. Close Funds have no problems related to inflows or the outflows of the cash which is why they allow the fund manager to invest for long term oriented options (Fredman, 2000).

Things every investor should know about Close Funds:

Following are some important things that every investor should about the Close 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. The Close Funds are managed by the fund managers, which mean that that investor does not have to rely on this knowledge. The fund manager will do all the work while keeping the investor hassle free.

  • Larger dividends:

    The best thing about the Close Funds is that they pay larger dividends as compared to the traditional funds. The Close Funds tend to product much more income its investor. These types of funds are best for people who are more inclined towards the larger dividends and investors who are looking for income-oriented portfolio.

  • Shares:

    The reacting nature of the Close Funds is different from the traditional funds. The reason behind it is the fact that there is reflection of fund’s total asset on the close funds and is more of a subject to the condition of the market. Furthermore, the total amount of the 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 the Close Fund. Despite the struggle for the larger yields, there are chances that they might invest in stocks and bonds. This might be more profitable for the dividends as compared to the other common stock; however, the Close Funds might result in being taxed for the fund’s payout considered to be income instead of low dividend tax rate.

  • Duration:

    Close funds havea duration and it is not possible to exit or sell the fund before the end of the 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:

The Open Funds are the type of funds that do not have any type of restrictions regarding the amount or number of shares that a fund can issue. This no-restriction quality of the Open Funds makes it stand out from other types of investment funds in the market. The Open Funds provides its investor a useful as well as very convenient vehicle of investing.

What is Open Funds?

The Open Funds are a type of Mutual Funds. The Open Funds buy as well as sells the units on the regular basis which allows the investor to enter or to exist whenever he aims to. These units are bought or sold at NAV, net asset value that is declared buy fund. Total number of units can go up and down each time a fund house repurchases or sells existing units (Louis, 2014).

Why Open Funds:

The Open Funds has zero restrictions to the number of the shares that can be issued by the fund. The Open Funds are best for investor who do not have time to keep a close eye on their portfolio and still aims for high returns. The Open Funds are managed by the fund manager, which makes the life of the investors hassle free. However, the Open Funds do not have any restriction of involving the fund manager. The investor can or buys or sell his share without taking anyone’s help.

Things every investor should know about Open Funds:

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

  • Easy access:

    Open Funds are popular among masses due to their one quality i.e. accessibility. The Open Funds are easily to access and can be found almost everyone. they are very straightforward and easy to understand which saves the investor from additional hassle of understanding them (Aden, 2012).

  • Freedom to enter or exit market:

    One of the biggest advantage Open 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 he wants. In this way, the Open Fund allows the investor to enter or exits the market as per his likings.

  • Reliability of the asset:

    The reliability of the asset valuation is one big drawback of the Open Fund. Whenever a investor purchases some unites of a exiting 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 the third parties for the valuation services (Jacob, 2013).

  • Higher expenses:

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

6.  Professional funds:

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

What is Professional Funds?

Professional Funds as the name indicated are for the professional investors who taking investing their money serious. Professional funds are not for investors who enter and exit market every now and then. The Professional Funds are for the investors who have high net worth.

Why Professional Funds:

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

  • Diversification:

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

  • High fees:

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

  • Ties up money:

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

7.  Money Market Funds:

A mix of Mutual and Open Ended Funds, Money Market Funds is famous type of investment fund. Money Market Funds solely invests in the 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 who has the objective is to maintain the NAV, net asset value, while earning the interest for the shareholders. In simple world, the investor at the end of the day will get the amount he invested along with the earned interest.The 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 the 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 that are out there looking to make some investments but are afraid to get stuck for a long period of time. For such people Money Market Funds is the right 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 mater. It also offers consistent yield which is important for the liquidity. The Money Market Funds are proved to be the most stable ones in the market which followers good returns to its investors while keeping NAV intact (Kant, 2011).

  • Limited Withdrawals:

    Money Market Funds is an easy way to invest however; 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:

    The 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. Yes, 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 kind of people should go for the Bond Funds. Similar to different types of investment funds, the Bond Funds are also managed by the fund manager which means that the investor gets to relax his nerve while investing his 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. The Bond Funds do not mature on its own, like regular bonds. The fund managers have to add new bonds to the portfolio as the old bonds are sold. The Bond Funds are more fragile than the regular bonds which usually invest in a year or sometimes even less (Dielen, 2015).

Why Bond Funds?

Bond Funds are the perfect option for people who want to invest but not in regular bonds. People investing in the Bond Funds can go for long term or short term investment as per their likings. The 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. The Bond Funds offers the element of diversity to its investors. There are different types of Bond Funds available in the market which includes both Government as well as Corporate Bonds. The investor is free to choose the type of Bond Funds he wants 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 his share 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:

    While the Bond Funds are easy to sell, however, there is a risk in it as well. When someone plans on selling his share, he will revive the current NAV, Net Asset Value of the share i.e. the total value of fund’s holding which is divided by total number of the fund shares. If the current NAV is lower than 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. The 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 the Stock Funds. The Stock Fund is also managed by the fund managers.

What is Stock Fund?

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

Why Stock Funds?

The Stock Fund is the perfect investment option for people who want to invest in long term benefits. The Stock Fund offers long term growth rather than only focusing on the income. The 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 Fund.

  • Increase in cash dividend:

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

  • Diversification:

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

  • Price Fluctuation

    Taking about the let down 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 fess:

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

10.  Alternative Investment Funds:

The Alternative Investment Funds is different type of investment funds. It is not a 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 derivate investment vehicles. Some Alternative Investment Funds even have banks issuing special derivate for their investment. There are different limited 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. The Alternative Investment Funds differs from other type of investment funds in terms of the low correlation, use of huge variety of techniques and dynamic strategies of trading. The special features of the Alternative Investment Funds make it popular among different types of investors (Archerselevators, 2015).

Asset management world:

Recently the 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 as the distinct class (Insight, 2014Insight, 2014).

Alternative Investment Funds and Fund Managers:

One of the most important things about the Alternative Investment Funds is to channel the investment flow. Since the Alternative Investment Funds are managed by the fund managers, which is why it is important for them to make sure that the investment flows in different but huge range of the opportunities. To meet the needs of the client it is important that the fund managers of the Alternative Investment Funds must be ready to adopt flexible operating and business models (Mellon).

Alternative Investment Funds 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 the Alternative Investment Funds industry determined to range of the external factors with some regulatory changes, technological development and economic cycles, all plays very important role. When it comes to future of the Alternative Investment Funds, 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 alternative Investment Funds. As most Forex is not traded at regulated Exchanges the Forex Fond Manager can basically make every price for the customer or his Forex Fund. The development of the Forex Fund is totally in the hands of the (unregulated) Broker and the (unregulated) Exchange while every Dollar which the investor loses the Broker and Exchange wins. This is even written in the terms of most Forex managed Funds if they are sold in a regulated Country like the USA. If an Investor invest in a Forex Fund in a non (or nearly non) regulated Country the investor is totally in the hand of the Forex fund operator.

Another special case of the Alternative Investment Fund is the Hedge Fund. Hedge Fund have started as funds which hedge (or secure) positions. For example they bought some stocks and they hedged (secured) the stocks with options against losing in value. In the 80th many Hedge Fund Managers were able to magically have outstanding results even when the market was down. Other types of alternative Investments are Commodity Funds, which invest in exchange traded commodities like Softs (Wheat, Corn, Hog, Milk, Cattle), Metals (Iron-Or, Gold, Silver, Copper), Energy (Crude-Oil, Heating-Oil, Gasoline, Natural-Gas) or even exotic things like Volatility.

11.  ETF Funds

One of the lowest risk carrying type of investment funds is Exchange Traded Funds, commonly known as 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 a lot of factors involved in the popularity of the ETF Funds which includes their simplicity (Calicchio).

What is ETF Funds?

ETF Funds is basically a security that tracks bonds, index, commodity or even a pool of assets. The ETF Funds trades more like a common stock. The prices of the 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, the 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 end up paying less amount of fees for the management of ETF Funds(Whelton, 2013).

Things every investor should know about ETF Funds:

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

  • Transparency:

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

  • Easy availability:

    The ETF Funds are usually available in almost all the sectors which includes the precious metals (metal ETF) health care and so on. The easy availability of the ETF Funds is one of the key factors behind the huge popularity of this type of investment funds.

  • 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, can possibly result in losing double or even trip tracked index. If ETF Funds are help for more than one day, there are a lot of chances that the investors have to bear double or triple loss.

12.  UCIT Funds

The Undertakings for Collective Investment in Transferable Securities, commonly known as UCIT 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. The 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 option to go with for the 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 making their own choice of the investment to go with, however, the strategies that are able to fit with requirements are extremely transparent under the EU laws.

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 the US have a withholding tax for foreign investors under which they keep 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 1000US $ but more about the work associated with it.

Summary: Most funds are pooled investments

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