What is a mutual fund?

10. 12. 2020

Mutual funds are not fictional. It is an investment in a basket of various stocks or bonds of well-recognized, globally established companies that produce the products we use on a daily basis (Apple, Microsoft, Facebook, McDonalds, Google, Johnson & Johnson, Heineken, Roche holding, Novartis, etc.).

What is a mutual fund?

A mutual fund brings together the cash of a large number of owners/investors. These pooled funds or the collected assets of the investors are taken care of by the asset managers. They spread it between different investment classes (stocks, bonds, short-term securities, etc.) across different regions and industries. All these investments are monitored daily by managers and they decide what to do with them. All this is done in accordance with a predetermined investment policy and objectives of each fund – namely, for each fund it is specified in which shares/bonds it can invest, in what portions and in which region, what is the size and credit rating of companies, etc. When paying into the fund, the investor becomes the owner of a proportionate part of the mutual fund's assets.

The entire assets of the mutual fund are divided into units – mutual fund units.

Mutual funds are managed by management companies, which must obtain the permission of the supervisory authority for their activities. In Slovenia, this is the Securities Market Agency (ATVP).

Funds are therefore an alternative to independent trading or investing on the stock exchange.

For a small investor, investing through mutual funds is cheaper, more efficient, much more diversified, and thus less risky, and above all, they do not have to deal with individual investments, as this is taken care of by experts. Investors can thus diversify their assets around the world and in various industries, even with relatively small investment amounts.

SKB Bank acts as a distributor of Amundi Funds and Amundi Index Solutions umbrella funds, Amundi Luxembourg S.A. management company, CPR Invest umbrella funds, CPR Asset management company S.A. and the umbrella fund Moorea Fund of Societe Generale Private Wealth Management S.A.