How to choose a mutual fund to invest?

How to properly invest in the mutual fund? 03 / 03 / 22 William Hunter Visitors: 431 Rating: ★★★★★

How to properly invest in the mutual fund? How effective is investing in mutual funds? What can be risky investments in mutual funds? The answers to these and other questions can be found in this article.

Comparative analysis of mutual and corporate funds

Investment funds or collective investment institutions in their organizational and legal form are divided into:

Corporate and mutual funds, in turn, depending on the order of activities are divided into:

Open-end and interval investment funds, depending on the term for which they are created, are divided into:

Closed-end investment funds are divided into:

Non-diversified investment funds, in turn, can be venture or non-venture.

How to understand such diversity for the investor and, most importantly, which investment fund to prefer?

To begin with, we compare corporate and mutual funds

Legal form:

Corporate Investment Fund: Is a legal entity, created in the form of an open joint stock company, more than 70% of the average annual value of assets - securities

Mutual investment fund: Not a legal entity, the assets belong to investors on the right of joint partial ownership

Opportunity for investors to participate in fund management:

Who can be a member of an investment fund ?

Corporate investment fund: Individuals and legal entities, in venture funds - only legal entities

Mutual investment fund: Individuals and legal entities, in non-diversified - only legal entities

Relationship with the asset management company:

What securities does it issue:

Possibility to receive dividends:

AMC replacement and liquidation:

The order of satisfaction of depositors' claims in liquidation:

It should be borne in mind that corporate investment funds are often closed-end non-diversified.

Comparative characteristics of open-end, interval and closed-end investment funds:

 Redemption of securities

Term of existence


Closed-end investment fund Can be diversified and non-diversified (venture and non-venture)

Asset structure

Open-end investment fund Not less than 10% - cash, for diversified - only securities and cash, of which not more than 20% of securities that are not admitted to trading on the stock exchange or in the trade information system

Interval investment fund Not less than 10% - cash, for diversified - only securities and cash, of which not more than 20% of securities that are not admitted to trading on the stock exchange or in the trade information system

open-end investment fund The same requirements for diversified, for non-diversified - no more than 50% of securities that are not admitted to trading on the stock exchange or in the trade information system + real estate; for venture capital - 100% of securities may not be admitted to trading, the structure of assets may include debt obligations

Determining the value of net assets

Circulation of securities

Open-end investment fund Limited: alienation is carried out only by redemption of AMC, alienation to third parties is allowed only in case of succession, inheritance and gift

Advantages of investing in an open-end mutual investment fund :

Disadvantages of investing in open-end mutual funds:

Advantages of investing in an interval mutual fund:

Disadvantages of investing in interval mutual funds:

Advantages of investments in a closed-end mutual investment fund in:

Disadvantages of investing in closed-end mutual funds:

 When choosing the type and type of investment fund should take into account their capabilities and expectations from investing. Yes, you should not invest the last money in closed-end non-diversified investment funds in the hope of huge profits, as there is a serious risk not only of not getting rich, but also of losses. Expecting a quick return, it is better to choose an open or interval investment fund, for long-term - closed. If there is no possibility and desire to constantly monitor the quotations of shares in the market, again, it is better to focus on less risky funds, etc. And although the investor can not always influence the level of their income, he is always free in his right to choose the object of investment.

The activities of investment funds are regulated by the law

The profitability of a fund depends on its investment strategy and the assets in which the fund's money is invested. There is no official classification of funds according to their assets (or direction of investment, but it will be useful for a potential investor to know that investment funds include equity funds, bonds, money market funds, balanced and index funds.

Money market funds - a significant part of their assets are distributed among money market instruments, primarily deposits and bonds.

Balanced funds - their assets include stocks, bonds and deposits. At the same time, such funds often invest in shares of the second and third tier, which allows to increase potential profitability, and high risks are offset by investments in fixed income instruments - deposits and bonds

Index funds - the structure of their assets repeats the composition of the indices of stock exchanges. In fact, these are also equity funds, but only those included in the index basket

Obviously, this division is quite conditional: for example, bonds in their investment strategy can use both bond funds and balanced or money market funds, and equity funds can also invest part of the funds in deposits or other securities.

There are more specific types of funds: for example, those who invest in real estate or artistic values, but they are not yet widespread. But there are funds with a mixed strategy. Their funds are distributed among various assets, such as stocks and real estate.

It is not difficult to find out to which type a fund belongs: often this information is already contained in its name. If not, then information about the investment strategy of the fund and what assets are invested in it, you can find on the website of the asset management company.

How to choose an investment fund?

Regardless of the stock market situation and the investment strategy you prefer, there are a number of indicators that an investor should pay attention to in the first place when choosing an investment fund.

Once you have decided on the type of fund, or even before, you should compare the funds operating in the market, on several indicators. When choosing an investment fund, the investor should look at the historical profitability, and the management company, and the structure of assets. Not the last role in this list is played by the company's reputation. In fact, the investor's choice is relatively small, as there are about five or six reputable companies that manage large funds.

As for the profitability of the fund, then a potential investor should not focus on the figures of the last year, let alone the month. It is best to assess the profitability of the fund from the beginning of its operation - so you can compare what results the fund showed in different states of the stock market. It is necessary to look at the historical average annual return since the formation of the fund, compare this return with the average market return for this class of funds.

After that, it is worth assessing the composition of the fund's investment portfolio. The structure of the fund should look at the presence of illiquid securities that are poorly traded. Unfortunately, some shares of even well-known companies may be illiquid on the stock market, so you should seek professional advice. If you are not able to get any information about which securities the fund is invested in, it is also better to refrain from participating in it.

Finally, if you have chosen several funds with a fairly high average return, a reputable management company and you understand the composition of the investment portfolio, you should compare the rates and commissions you have to pay when buying an investment certificate or shares of the fund.


To avoid all sorts of problems and surprises, when choosing investment certificates you need to look at the terms of purchase and terms of sale. And then - you can control the actions of the AMC to manage the fund. All investors of the fund form the so-called supervisory board, ie any of the investors can participate in checking how the AMC complies with the regulations of the fund and the investment declaration. And the law protected UIF investors from all sorts of abuses in a very simple way. The investment fund's accounts do not belong to the AMC, and all funds in the accounts belong to the fund. And the bank that keeps these funds, in accordance with our legislation, acts as a kind of police officer, whether the lawful transactions with the funds of the fund, or properly spent. Each AMC order on the use of the fund's funds is checked by the bank for compliance with a special investment project of the mutual fund, registered by it with the State Commission on Securities and Stock Market.

How to get rid of a share?

If the investor decides that he will have enough and needs to sell his contribution, it will not always be easy for him to do so. Applying to the investment fund, the money is likely to be received not immediately, but within 2-3 banking days. If the client is in a hurry, he can sell his share on the open market by selling it to brokers or other investment companies.

However, the latter are likely to buy a share at face value or at a discount from the market price of 20-30% - so, it is still better to sell it to the fund. But do not forget that the fund will require you a fee for withdrawal - the same 1-2% - and for the maintenance of AMC - 2% of the value of the unit. Plus, you have to pay income tax on investment income received after leaving the fund. Of course, you may not pay the tax, but in the future, if the tax detects this default when filing a tax return, you may be in trouble.

Experts recommend not to twitch if the market began to fall and the value of net assets per share of the investment fund is steadily declining. After all, it is not so easy to sell your share quickly, and it is possible that from the moment of sale the market will sag even more. It is worth noting that the stock market is sinusoidal - it falls, it rises. Long-term downward or upward trends are rare. So the best option is not to get nervous and wait for the market to rise and the peak of the fund's profitability to grow.


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