Closed end investment fund

Investing in closed end investment funds

A closed end investment fund may invest assets in: 

• securities;
• shares in limited liability companies; 
• money market instruments;
• investment fund participation titles; - investment fund participation titles; 
• financial and commodity derivatives
• ownership or co-ownership of immovable property and ships and perpetual usufruct; and receivables; 
• currencies; 
• bank deposits.

A closed end investment fund may take out loans and borrowings of up to 75%. the net asset value of the fund.

Greater freedom in shaping the investment strategy and the lack of the need to have an appropriately high balance of free cash at all times enables closed end investment funds to develop diversified investment strategies for the effective use of their financial resources, which gives the potential to generate higher income than in the case of open end funds.

Closed end investment funds issue investment certificates, which are equity securities. They may be in the form of a document or may be devoid of documentary form (dematerialised). Dematerialisation takes place at the moment of registration in an appropriate register kept by a company, investment firm, bank or National Depository for Securities.

Investment certificates may be issued through private placement or public offering. Distribution of investment certificates is carried out by brokerage houses or offices acting as offeror and by participants in the consortium, if any.

The buyer of investment certificates on the primary market may submit them for redemption at a date set by the fund or may deposit them on a securities account.

Valuation of assets by closed end investment fund

A closed end investment fund carries out asset valuation and net asset value per single investment certificate (WANCI) based on the number of investment certificates existing at the valuation date.

Pursuant to the law, the valuation of the fund's assets should be carried out at least once every 3 months and 7 days before the start of accepting subscriptions for further issue certificates and also on the certificate redemption date.

The frequency of each fund's valuation is specified in its statutes. The redemption price of the investment certificate is equal to the net asset value of the fund attributable to the investment certificate, as measured on the redemption date. Certificates redeemed are subject to redemption by law.

The dematerialised transferable transferable investment certificates may be traded on a regulated market of an exchange, where they are subject to market valuation in the same way as other securities. Investors can invest in them in order to earn income resulting from the growth of their market prices.

Investment certificates acquired in the initial offer may be deposited on a securities account and then sold at any time during the trading session without the need to wait for redemption. Holders of investment certificates credited to securities accounts may also submit them to the fund for redemption.

Exchange quotations of investment certificates often differ from the net asset value per investment certificate. This is because the market valuation is guided by its principles. Since the last valuation date, the factors influencing the prices of the fund's deposit components may have changed (e. g. the amount of the amount of the investment fund's net profit or loss). The price of raw materials, in the case of the raw material market fund, investing in shares of producers of those raw materials).

The trading of investment certificates is also affected by the general stock exchange situation, market liquidity and other factors, such as the following the market reputation of the fund manager.

Closed end investment fund reports

A closed end investment fund whose investment certificates are traded on a regulated market shall publish current reports and periodical reports in accordance with the regulations on information obligations of issuers of securities listed on the Stock Exchange.

Current reports shall include information on any circumstances or events that could have a material effect on the financial and legal position of the fund or could have a material effect on the price or value of listed investment certificates. Interim reports are published on a quarterly, semi-annual and annual basis and contain financial reports prepared within the scope appropriate for a given report.

A closed end investment fund may make payments of income without redemption of certificates. This applies in particular to non-public assets or real estate funds that have realised a profitable investment.