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Fund portfolio

Investing in portfolio funds

Portfolio funds may operate on the legal form of a closed end fund. A characteristic feature of such a fund is the possibility of continuous issue and redemption of investment certificates.

The fund owes its name to the fact that its investment portfolio may be based on the composition of the stock exchange index portfolio or the composition of the securities portfolio, as defined in the fund's statutes, but not based on an index (the so-called base portfolio).

This means that when selecting deposits, the fund will seek to purchase securities that most faithfully reflect the behaviour of the stock market index or the underlying portfolio.

The advantage of the portfolio funds is that it is a convenient form of investment for every investor, including the retail investor. In addition, this fund shall have the possibility to reimburse the participant, instead of the money, a bundle of securities, in the proportion specified in the fund's statutes, in the event of redemption by the participant of the investment certificate.

Such a possibility should be very interesting for those of us who are interested in building their own securities portfolio, because through the acquisition and subsequent redemption of certificates they can easily create such a portfolio, while incurring significantly lower transaction fees than if they would buy shares or bonds on the stock exchange themselves.

Portfolio funds will have another extremely attractive offer. Namely, if, according to the fund's articles of association, the investment certificate reflects a strictly defined set of securities, each fund participant will be able to participate in the general meeting of companies included in the fund's investment portfolio and to exercise the voting rights attached to the shares (as defined in the fund's deposit certificate) according to their own preferences.

Other new types of investment funds

Money market fund

These funds are primarily a tool for the use of temporary financial surpluses, and they are also used to use free funds in periods when the capital market is discouraged from investing on the stock exchange.

Money market funds - due to the fact that there are strictly defined, very safe types of deposits, such as treasury securities, short-term bonds or commercial vouchers in which they can invest their assets will be characterised by a sufficiently low level of risk to be an alternative to banks and equally secure form of investment for investors.

For this reason money market funds are an excellent investment for every investor, whether small or large.

Non-public assets funds

The basic principle of such funds, known worldwide as private equity or venture capital, is to invest the fund's assets in shares in private companies and to prepare and implement programmes aimed at increasing the value of such companies. After achieving the expected results of restructuring programmes, the fund sells shares in the companies under investment.

In such funds, it is essential to pay out to the participants the income of the fund obtained immediately after the fund has sold the given deposit, without the need to reinvest the funds. Typically, such funds are created for a period of time close to the estimated time needed to acquire, restructure and dispose of selected non-public companies.

Typically, such funds, due to the certificate price, are addressed to more affluent and demanding participants, who at the same time accept a high risk related to the deposits in which the fund invests. However, it is possible to set the price of certificates in such a way that they are also available on the stock exchange for poor investors who are not afraid of risk.

In the case of non-public assets that issue registered certificates, it will also be possible to collect funds into a fund, which consists in the partial payment of investment certificates during the issue of certificates and surcharges on demand of the company, as the fund pursues its intended investment strategy. This will ensure that fund participants are not charged immediately with all the costs of the fund's activities.

Securitisation funds

The securitisation fund for the money received from participants who buy issued investment certificates will purchase a pool of receivables and then pay the participants the funds obtained from satisfying claims arising from these receivables.

Since the amount of payments to participants and the certainty of these payments depends primarily on the type of debt that the fund will acquire, investment in a securitisation fund may be more or less risky.

We will have two types of securitisation funds to choose from: a standardised securitisation fund and a non-standardised securitisation fund. These funds differ in their legal structure and the assumed level of risk associated with their investment certificates.

As a rule, any investor may be the purchaser of standardised fund certificates, whereas any investor may participate in a non-standardised securitisation fund only legal persons, organisational units without legal personality, although the fund may also allow natural persons who will be able to pay at least the equivalent of EUR 40 000 for a single investment certificate.


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