UIF is Mutual investment fund

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

PIF is a kind of collective investment of funds with subsequent profit. The funds of many investors are put together in a single fund and certain assets are acquired on them. They are bonds, depersonalized metal accounts, shares, deposits, real estate, that is, a standard gentleman's set of financial instruments permitted by law. The activities of the fund's employees are aimed at obtaining the maximum profit with the funds received under management, so that the fund's assets increase and the shareholders can receive the profit they are en titled to.

Pros of a Mutual Fund

Starting capital can be small. Some funds are ready to accept a contribution in the amount of one thousand rubles. You don't have to study the market on your own. This is already done by specially trained people working in the fund.

How it works

Not any organization, and even more so an individual, can create a mutual fund. This is a licensed activity. The license is issued by the Federal Service responsible for control over the financial markets of the Russian Federation. This body both issues a license and controls the subsequent activities of the mutual fund. The audit takes place at least once every three years. That's why the fundmust conduct all operations correctly and work within the framework of the law.

As soon as the license is obtained, the fund can start attracting investors (shareholders). It can be both citizens and organizations. Each person can buy shares for a certain amount of funds, and this amount is at the disposal of managers. The fund can use investors' money to buy securities that are in free circulation and, by making such transactions, makes a profit, which leads to an increase in the value of the fund's assets, which means that the value of the shares increases.

Pai - what is it?

Investment share is a registered security that records the fact of an investor's investment in a fund of a certain amount of funds. In other words, the investor thus fixes his own right to a share of the property of the mutual fund. The ownership right is documented through an entry on the personal account of the depositor, which is opened in the register of the mutual fund. The number of units the investor will hold is likely to be a fractional number.

Change in the value of a share

The value of units, like the value of any other asset, is subject to investment risks. The share does not have a nominal price, but its estimated value is calculated with a certain frequency. For example, open-end mutual funds calculate the unit price every business day (on holidays and weekends, the cost is equal to the price for the last business day).

Interval PIF does this on the last day of the interval (the period when you can repay and purchase shares) and the last business day of the month. Closed Mutual Funds calculate the value on the last business day of the month and the day following the last day of applications for the purchase of additional units. All buy/sell operations of this fund's units are based on their price on the last day when orders were accepted.

The cost of shares is calculated simply: the price of the mutual fund's net assets (NAV) is divided by the number of shares. Information about them can be viewed in the register of fund investors. The net assets of a mutual fund are determined by subtracting the amount of the fund's liabilities from its assets (funds held in the fund's deposits and on its accounts).

Profit Guaranteed

Guaranteed return on mutual funds, like other financial instruments, is missing. Everything is determined by the amount of supply and demand for stock assets. And the shares of investment funds cannot give a guaranteed return. Moreover, in the information about the mutual investment fund, it cannot be said about guarantees regarding the profitability of the management company in the future. This is described in more detail in Article 51 of the Federal Law "On Investment Funds". However, the future investor must understand that only low-yielding instruments, such as bank deposits and bonds, can guarantee profit. You just need to minimize the risks at the selection stage, and then the profitability of mutual funds will help to increase funds.

How profit is formed in the fund

If an investor decides to invest one hundred thousand rubles in the fund, and the cost of one share at that moment was four thousand rubles, then he will be able to purchase twenty-five shares. Let's say byafter some time, the fund's assets became more expensive, and the cost of one share began to equal six thousand rubles. The value of all shares acquired by the investor, in this case, began to amount to one hundred and fifty thousand rubles. So he was able to earn fifty thousand rubles, excluding commissions and taxes. This is how each of the shareholders can receive their profit using the shares of mutual funds.

Rules for successful investing

The essence of the rules is simple. Investments should be made for the long term. A mutual fund is a long-term investment tool (from two years). Therefore, all invested funds should lie quietly for the next two or three years and form a profit. Such an investment is good because it is not affected by the short-term fluctuations that the stock market is so susceptible to. This provides a higher rate of return.

From here follows the second rule: you should invest free funds that will not be needed in the near future. Short-term investments are possible and may even be profitable. But this approach does not guarantee income from each investment in a mutual fund. You should invest in reliable mutual funds, whose reviews and ratings indicate the possibility of making a profit.

Rating of Mutual Funds

It is easy to get information about the performance of a particular fund. It is in the public domain. But when studying it, it is worth considering a number of points.

• What is the rating of the management company in terms of the amount of funds raised over the past year? Two years? Three? When studying the rating of mutual funds, it should be understood thatthat the investor invests funds for a long period, and the safety of the investment and the success of the investment will depend on the ability of the management company to manage the funds of the investors.
• What is the rating of the management company in terms of net asset value? This value indicates how much funds of fund participants are under the management of this MC. And the higher it is, the higher the popularity of the management company, and hence the greater the credibility of it.
• What is the rating of mutual funds in terms of the amount of funds raised? It is better to check this indicator for the year and for three years.
• What is the mutual fund's net asset value rating?
• What is the yield rating of the mutual fund? It is this rating that attracts the attention of investors in the first place. This indicator ranks funds according to the amount of return they were able to achieve over a certain period of time. For example, the management of mutual funds of Sberbank led to the fact that the fund "Sberbank - Global Internet" gave a yield for the year of 49.91%.

How to buy shares?

There is nothing complicated here. It is enough to be in the office of the management company or contact its intermediary. The role of an intermediary is often played by investment companies or banks. There you will be asked to complete and sign the following documents:

• Application for opening a personal account. When a management company has several funds, and the investor decides to make deposits in more than one fund of this company, then accounts must be opened for each deposit.
• Registered Person Questionnaire.
• Application for the purchase of investment units.

All documents are drawn up and signed in triplicate, and when working with an intermediary - in four. With papers, of course, there is a bit of hassle. After a couple of days, an instruction will come from the management company to purchase shares with all the details.

Sale of shares

This action is similar to buying. You will also have to visit the office of the management company and write an application, in this case, about repayment. Usually, only a passport is required from the documents, however, information about the number of shares owned by the investor, the number of the personal account is sometimes required. Therefore, it is better to go with a full package of documents.

It is worth remembering that the sale and purchase of different mutual funds are carried out in different ways, or rather, at different times. Open funds, which are the majority, will allow the investor to sell on any of the working days, interval funds - at the time the interval opens, closed ones - when a mutual investment fund is formed or additional shares are placed. But there may be exceptions.

Selling and buying operations with a broker

There are advantages to trading shares through a broker.

• Purchase of units of closed-end and interval funds is possible on any day when the exchange is open.
• It is possible to avoid premiums when buying and discounts when selling units.
• Speed of execution of the investor's order.
• No need to get to the office of the management company.

However, there are also disadvantages. Not every mutual fund lists its shares on the stock exchange. "Promstroybank", "Metropol",Interfin Capital, Uralsib are an example of management companies listed on the stock exchange. Sberbank Asset Management, whose mutual funds are listed on the stock exchange, is also one of the largest management companies. Such shares do not have the highest liquidity and therefore the spread will be high. Instead of surcharges and discounts, commissions to the exchange and broker will appear (even if they are several times lower), as well as a fee, though not always, for depositary services.

PIF. Banks

Many banks practice the "Deposit plus Mutual Fund" service. Thus, when placing funds, the depositor places part of them at interest in the form of a deposit, and the rest is used to purchase shares of mutual investment funds managed by the management company of the same bank. Whether this is good or bad depends on the work of the management company. After all, with its good performance, the yield on shares will exceed the percentage on the deposit, which, of course, will bring joy to the investor. Otherwise, the investor will regret the lost profits that he could have received when he placed all available funds in the form of a deposit at interest.

Taxation

You will have to pay income tax only when redeeming shares. And this is the only payment that you need to "gift" your favorite tax. Profit is easy to calculate - it is the difference between the current value of shares and the cost of their purchase. Usually, the calculation and withholding of this tax from individuals is the responsibility of the management company. This means that the investor does not have to deal with self-completion of the tax return. For residents, the tax will be 13 percent, fornon-residents - 30 percent.

Shareholder's expenses

There are two main types of commissions practiced in mutual funds.

• Commission that increases the value of a share upon purchase (purchase premium). It should not exceed one and a half percent of the estimated value of one share. Some management companies do not charge it at all.
• Commission that reduces the value of a share when selling (discount when selling). It should not exceed three percent of the estimated cost.

Remunerations of the management company, appraiser, auditor, registrar, depository are also included in the expense column. But they all lie within a few percent and are taken into account when calculating the value of shares.

Main players

1. Uralsib. Mutual investment funds: Uralsib First, Uralsib Prospective Investments, Uralsib Eurobonds, Uralsib Financial Sector, etc. Recently, there have been few positive reviews about Uralsib funds, and they are all focused on non-core forums. The management company "Uralsib", whose mutual funds showed very good returns at the beginning, is now subjected to sharp criticism from investors. Many savers believe that they could have achieved much better returns on their own.
2. VTB mutual funds: "VTB - Eurobond Fund", "VTB - Equity Fund", "VTB - Balanced Fund", "VTB - MICEX Index", "VTB - Telecommunications Fund", etc. VTB funds differ in terms of profitability, but a lot of complaints come from customer service. Therefore, considering VTB mutual funds as an investment tool, you need to be preparedto this.
3. Sberbank's main management company is Sberbank Asset Management. Mutual funds: Sberbank-Natural Resources, Sberbank-Financial Sector, Sberbank-Europe, Sberbank-America, Sberbank-Gold, etc. This management company has proven to be reliable, which is not surprising.

Several questions about mutual funds

Is it possible to donate shares? Yes, it's possible. It is enough to conclude a standard donation agreement in the usual written form.

Can shares be inherited? Yes, they can, in general. The Civil Code of the Russian Federation describes in detail how this is done.

Conclusion

So, PIF is a great way to invest and increase your funds. The main thing is to choose a worthy fund. When comparing a mutual fund and a brokerage account as investment methods, a novice investor should focus on the first option. Indeed, in addition to the advantages described above, there are additional ones:

• You can invest a small amount of money and get the benefits of the most profitable instruments (index portfolio, real estate and others).
• An investor, investing in mutual funds, trusts the management of professionals (in this regard, the fund is similar to trust management).
• Although investing in a mutual fund does not allow you to use all the possibilities of the securities market yourself, but the investor frees up his time for other things. And this, you see, is also a huge plus.

In other words, if an investor does not like to deal with all the intricacies of the securities marketsecurities, but you want to invest, then investment mutual funds are exactly the tool that will allow you not only to save, but also to increase your savings.