A mutual fund (FCP) is a pooling of investors’ money on the stock market, which allows you to start trading with small sums of money, but also to diversify your portfolio to minimize financial risk. . There are many investment funds, with various objectives: FCPR, FCPI, FIP, SICAV.
The mutual fund (FCP): definition
A mutual fund (FCP) allows the pooling of investors’ money . They invest their money directly in the fund so that it manages, buys and sells the securities on the financial markets, according to its objectives or its investment policy: strong short-term growth, long-term return term, the assurance of maintaining its starting capital, the assurance of seeing the funds invested in specific securities…
Each investor, called a “security holder”, holds a share of the fund, in proportion to the securities he holds on the money market. As soon as a new investor places money in the fund, new shares are issued. Mutual funds make it possible, in a way, to “pool” investors’ money.
Investment companies with variable capital (SICAV)
SICAVs , for Sociétés d’Investissement à Capital Variable, are fund management companies where investors become direct shareholders of the fund, unlike mutual funds (FCP) where investors are in a way co-owners of the fund. In the latter case, they have no voting rights at general meetings of the fund and cannot stand as candidates for the board of directors. In absolute terms, SICAV and FCP have the same vocation.
Risk mutual funds (FCPR)
Venture capital funds (FCPR) are funds specializing in investing in assets not listed on stock markets. They do not guarantee the starting capital, but the rate of return on investment can be very high and exceed 15%. FCPRs attract investors who wish to participate in the development of young companies while benefiting from advantageous taxation. Indeed, investing your money in an FCPR allows an exemption from realized capital gains, provided that the holders keep their shares for at least five years and that they also capitalize the income of the fund.
Some risk mutual funds specialize even more, such as innovation mutual funds (FCPI) or local investment funds (FIP) which aim to invest at least 70% of the fund in SMEs located in an area comprising four neighboring regions.
Company mutual funds (FCPE)
Corporate mutual funds are set up by the employer. They are intended for the employees of a company within the framework of collective savings. FCPEs are managed by specialist employee savings management organisations .
The advantages of FCPs
There are several advantages to investing in a mutual fund (FCP). First, fund management is entrusted to professionals who have specific software and all the information in real time to optimize investments. Then, investing in a mutual fund allows you to buy more financial securities than by calling on an independent investor. By diversifying your portfolio, you spread the financial risk. In general, except for risk mutual funds (FCPR), fund units can be bought or resold at any time to recover them in cash. Finally, you can easily transfer your money from one fund to another according to your new financial goals.
The disadvantages of FCPs
What is an advantage for one can become a disadvantage for another! Thus, by entrusting the management of your money to a mutual fund rather than to an independent broker, you annihilate your personal objectives to the benefit of those of the fund and the investment community. The investments made will not be strictly adapted to your personal situation. Plus, you completely give up control of your money. A well-managed mutual fund attracts a large volume of investors, but the more holders the fund has, the lower the rate of return on investment can be. In the long run, pooling your money often pays less than independent investing.
How to invest in a mutual fund?
Investing in a mutual fund means owning a share of the money market investments made by the fund. The value of each unit varies with the value of the fund’s investments. In short, investing in a mutual fund is like buying stocks on the stock market.
The best mutual fund
There is no better mutual fund than another. It all depends on your ambitions in this area! Each fund defines objectives, more or less risky . Some guarantee the starting capital, for example, and favor the purchase of bonds. Others are more risky, but may pay more. FIPs or FCPIs, specialized in specific investments, target investors in search of meaning, who share the desire to follow promising companies, to participate in the economy. It’s up to you to choose a fund whose investment policy is in line with your financial ambitions and your vision.